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KNOW YOUR HR STUFF: The Difference Between U3/U5/U6 Unemployment Rates

The economy is hot and the 2008/2009 recession feels distant, right?

That means now is a pretty good time to review the types of unemployment rates that are available out there for consumption. As it turns out, the one we usually hear about is an incomplete picture.  Here's a primer on unemployment rates that are available from the government and a chart that shows where we've been since 1995:

U3 is the official unemployment rate.

U5 adds on discouraged workers and all other marginally attached workers. These people are still unemployed, but not in the market for a variety of reasons.

U6 adds on those workers who are part-time purely for economic reasons.  

The U6 unemployment rate counts not only people without work seeking full-time employment (the more familiar U-3 rate), but also counts "marginally attached workers and those working part-time for economic reasons." Note that some of these part-time workers counted as employed by U-3 could be working as little as an hour a week, but they prefer full-time employment but haven't landed it yet. And the "marginally attached workers" include those who have gotten discouraged and stopped looking, but still want to work. The age considered for this calculation is 16 years and over

The current U6 unemployment rate as of December 2016 is 9.20, almost double from what's normally reported as the official U3 rate.  See historical chart below:

Unemployment rates

If you consider U6 "real" unemployment, it reached almost 18% post recession in 2009-10.  Damn.

I'd expect the gap between what's reported (U3) and the U6 rate to grow in the future, as the gig economy forces people to become part-time in an increasing variety of ways.



Rishi @topteninisder

Interesting figures! TBH, with this post only I came to understand completely what exactly does U3, U5 and U6 means. TBH, not everyone dives this deep and understands what exactly does it mean.And look at that graph along with figures, 18%. That is huge. I'll be looking forward to the prediction results.


"All governments are run by liars and you should never believe anything they tell you."

"There are three categories of lies: Lies, Damned Lies, and Statistics."

-Mark Twain


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