U-6 (Unemployment) Rate

U-6 (Unemployment) Rate

The U-6 (Unemployment) rate reveals the percentage of the labor force that is unemployed, underemployed, and discouraged from seeking jobs. When calculating the U-6 rate, the marginally attached group is added to both the numerator (total unemployed) and denominator (total labor force). To calculate the official unemployment rate, the U-3, the BLS divides the total unemployed by the total labor force participants. The U-6 (Unemployment) rate reveals the percentage of the labor force that is unemployed, underemployed, and discouraged from seeking jobs. The U-6 (Unemployment) rate includes unemployed, underemployed and discouraged workers to measure a country’s unemployment situation.

The U-6 (Unemployment) rate includes unemployed, underemployed and discouraged workers to measure a country’s unemployment situation.

What Is the U-6 (Unemployment) Rate?

The U-6 (Unemployment) rate reveals the percentage of the labor force that is unemployed, underemployed, and discouraged from seeking jobs. It is considered by many economists to be the most revealing measure of a country’s unemployment situation.

The U-6 (Unemployment) rate includes unemployed, underemployed and discouraged workers to measure a country’s unemployment situation.
It is considered by many economists to be the most revealing measure of a country’s unemployment situation.
Both the U-3 rate and U-6 rate are published by the BLS in the monthly job report, which is used by market watchers to gauge the health of the economy.

Understanding the U-6 (Unemployment) Rate

The official unemployment rate used by the U.S. government and recorded by the Bureau of Labor Statistics (BLS) is called the U-3 rate. This is the percentage of the labor force that is unemployed and has actively sought employment within the past four weeks. The portion of the unemployed that has not looked for a job in the past four weeks is no longer considered unemployed and instead is defined as "marginally attached."

The U-6 rate, on the other hand, factors in this marginally attached percentage of the labor force in its unemployment calculation. The marginally attached group includes discouraged job seekers who have given up looking for work, as well as workers who have unsuccessfully looked for work sometime in the past twelve months. This group also includes people who have returned to school or become disabled, in which case they may or may not return to the labor force.

In addition to the marginally attached category, the U-6 rate includes the underemployed in its metrics. The underemployed represents people who would prefer full-time jobs but have settled for part-time jobs due to economic conditions. While the U-3 rate considers this category of workers to be employed, the U-6 considers this group as unemployed.

The U-3 rate and U-6 rate are used to gauge the health of the economy.

Example of the U-6 (Unemployment) Rate

To calculate the official unemployment rate, the U-3, the BLS divides the total unemployed by the total labor force participants. For example, the June 2019 monthly rate report indicated that the total number of people that were unemployed was 5.975 million and the civilian labor force consisted of 162.981 million. The unemployment rate was, therefore, calculated to be 5.975/162.981 = 3.7%.

In the same June 2019 report, people that were marginally attached to the labor force totaled 1.571 million, while the total number of workers with part-time jobs for economic reasons was 4.347 million.

When calculating the U-6 rate, the marginally attached group is added to both the numerator (total unemployed) and denominator (total labor force). In addition, part-time workers are added to the numerator only, since they have already been included as part of the labor force. The real unemployment rate, U-6, in June 2019 was 7.2 percent. This is much higher than the 3.7 percent figure and is arguably a better reflection of the state of the economy at the time.

Related terms:

Bureau of Labor Statistics (BLS)

The Bureau of Labor Statistics (BLS) is a government agency that produces a range of data about the U.S. economy. read more

Civilian Labor Force

The civilian labor force is the U.S. civilian population that the Bureau of Labor Statistics (BLS) classifies as either employed or unemployed. read more

Depression

An economic depression is a steep and sustained drop in economic activity featuring high unemployment and negative GDP growth. read more

Discouraged Worker

A discouraged worker is someone who is eligible for employment and can work, but who is currently unemployed and has not attempted to find employment. read more

Employment-to-Population Ratio

The employment-to-population ratio measures the number of workers currently employed against the total working-age population of a region. read more

Recession

A recession is a significant decline in activity across the economy lasting longer than a few months.  read more

Underemployment

Underemployment is a measure of employment and labor utilization in the economy that looks at how well the labor force is being utilized. read more

Unemployment

Unemployment is the term for when a person who is actively seeking a job is unable to find work. read more

Unemployment Rate

The unemployment rate is the percentage of the total labor force that is unemployed but actively seeking employment and willing to work. read more