Friday, October 09, 2015

What's the real unemployment rate?

                                                             
                                                     Comments due by Oct. 16, 2015

The Labor Department said Friday that the unemployment rate stayed at 5.1 percent in September — but does that tell the real story?
Most economists look beyond the "main" unemployment rate to other figures that can give a more textured view of the employment situation. On jobs day, the Bureau of Labor Statistics puts out a slew of figures, each of which provide their own view of the economy.
One of those figures is the U-6 rate. Many economists look to the U-6 rather than the main unemployment rate (also know as the U-3). The BLS defines U-6 as "total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force," plus all marginally attached workers.
Recession10 years of the U-6 rateU-6 rate2006200820102012201457.51012.51517.520August 2009 U-6 rate: 16.7%Bureau of Labor Statistics
In other words, the unemployed, the underemployed and the discouraged — a rate that remains stubbornly above prerecession levels.
The U-6 rate dipped in September to 10 percent, the one bright spot of the jobs report. The overall trend in the U-6 has been more volatile than the main unemployment rate and it's down 170 basis points over the past year, versus an 80-basis-point drop in the U-3.
The 'main' unemployment rate vs. the U-6Unemployment rateU-6 rateJan '13Jul '13Jan '14Jul '14Jan '15Jul '152.557.51012.515February 2014 Unemployment rate: 6.7% U-6 rate: 12.6%Bureau of Labor Statistics
The jobs report this month has particular importance because of the Fed's dependence on data for its decision on raising rates. The Fed declined to raise rates in September as many had predicted, but had hinted that a rate hike in 2015 was still likely.
The nation added 142,000 jobs in September, just 2 percent higher than in September 2014.
Year-over-year change in employmentNonfarm payroll employment. Recessions in grey.20002002200420062008201020122014-8m-5m-3m0m3m5mBureau of Labor Statistics
One ongoing cause for concern in the jobs report has been the area of wages. Average hourly wages increased 2.2 percent on a year-over-year basis in September; weekly wages inched up 2.4 percent.
RecessionWaiting on wagesYear-over-year change in weekly and hourly wages,three-month moving average.20082010201220140%1%2%3%4%5%December 2009 Change in average weekly wages: 0.88% Change in average hourly wages: 2.07%Bureau of Labor Statistics
When the unemployment rate declines, average wages typically rise as employers have to compete for a smaller pool of job candidates.

16 comments:

Heather Kiczek said...

The article basically summarizes how economists truly look at the unemployment rate and arrive at their conclusions as to how the economy is affected by it. The U-6 rate put out by the Bureau of Labor Statistics looks at many more factors when measuring the unemployment rate. This is what economists prefer to look at rather than gazing at the overall picture. The main unemployment rate is always pressingly lower than the U-6 unemployment rate when looked at graphically because of the more factors that the U-6 takes into account. The article also touches on hourly wages. The hourly wages percentage as increased over the years by about 2.2 percent each year. With this rise, graphically, unemployment will go down because employers don't have to necessarily "share" their money with more employers in the work force. This allows for more income per employer. I think that it is important for economists to measure all aspects of their studies with greater detail rather than an overall picture, like they do with unemployment, in order to obtain more accurate results.

Anonymous said...

The article talks about unemployment at the moment, and how it is really seen by economists, and how it is viewed graphically. They mention current underemployment rates, stating that: "...the unemployed, the underemployed and the discouraged — a rate that remains stubbornly above prerecession levels." Personally, I found this statement to be a bit harsh, mainly because the U.S. is still attempting to climb out of the great recession, and no one should be expecting full employment at this time. Plus, we even learned in class that full employment is essentially bad, so no matter what, there would always be people saying things like that. Anyways, the article also talks about hourly and weekly wages slowly climbing up since 2014. There were graphs that showed things like "The 'main' unemployment rate vs. the U-6" and the "Year-over-year change in employment." Both graphs showed how unemployment and the U-6 in 2014 compare to 2015.

-E. Piper Phillips

Anonymous said...

This article talks about point of views within unemployment that are not very apparent to American people. Yes the unemployment rate is decreasing, but the amount of people who have jobs that they are nearly living on is amazing. Yes they are working, but is it worth their time and effort? In my opinion yes because their jobs help stable out the economy. We will never be at full employment in this country, but if we want economic growth, both GDP and employment must rise. Without one or the other, the functionality of this country would not prosper. Without the United States, many other countries will be in a downfall because the countries around the world are much more interconnected compared from the past. This is one way that the domino effect could take place.

-Alexander Shields

Liam Monarchio said...

The unemployment rate is decreasing but the companies that have to keep up with this must raise their average wages just to compete for smaller pool of candidates. Every time the unemployment rate decreases, whether it is the U-6 rate or the Unemployment rate, the unemployment rate always seems to increase past equilibrium and into positive numbers. It has formed some sort of pattern. Unemployment rates decrease and we are good and than the unemployment rates increase and we go into a recession and eventually the unemployment rates decrease again and we are out of a recession and this pattern has kept occurring. It seems to be difficult to hold a steady unemployment rate, especially when the economy is doing good. If the country finds a way to keep unemployment out of the way than we should have a better economy.

Andresious Cyprianos said...

The calculation of unemployment as seen in the article using the U-3 method leaves unemployment being greatly understated. Counting part time workers as full time workers over states those that were actually currently have employed. The employment rate calculated using the U-6 is a far more accurate measure and it states that the real unemployment is about twice the official one. The truth though is that unemployment an be exteremly difficult to calculate due to the presence of shadow economies, people may appear to be officially unemployed when in fact they have some form of employment. Now with the whole Fed interest dilemma, its extremely hard for the Fed to raise rate because this will make borrowing money more expensive. This will result in a lower amount of investment which turn leads to more unemployment. So basically the decision of whether to raise interest will affect the economic growth of the country even though more money would be saved.

David Bavagnoli said...

When looking at unemployment, it's important to take all factors into account. The U-6 rate plugs in people who are marginally attached to the labor force as well as the people who work part time. However, this can be unreliable because some people who are of working age aren't looking for work, and also some people work part time because they choose to. The U-3 rate is a calculation of unemployment, but only the people who are looking for work but cannot find a job. This is also slightly unreliable because it only accounts for the labor fore, which does not include discouraged workers, or people who work part time because they can't get a full time job. It doesn't make sense to me that the U-6 rate just about doubles the U-3 rate. Having two completely different unemployment rates just seems slightly redundant.

Anonymous said...

The topic of this article is about unemployment. The unemployment rate is decreasing so companies must raise what they play their employees. As a country full employment is almost impossible. When i say full employment i mean everyone in the united states working at jobs that they want and not what they need. People aren't working to their full potential and settling for part time jobs that teenagers should have. The employment rate is lower than the U-6. The article also explains that the hourly wages have rose since 2014 but that doesn't matter because of inflation. Still slowly but surely untied states is getting better economically.

-Marvin Jean-Baptiste

Anonymous said...

This article talks about the different ways the unemployment rate is calculated,
but does it really give the full picture of what's going on?
The U-3 rate only counts people who are unemployed. The U-6 rate takes into account
unemployed people, marginally attached and part-time workers. The U-6 rate seems to
be a more realistic rate of what is happening than the U-3 rate.
Since the Federal Reserve looks at both, they decided not to raise interest rates in
September, but they can still raise them before the end of the year if they want.
The weekly and hourly wages rates are affected by this because companies pay more
when there are less workers in the workforce.

-Marissa Schwartz

Prine Unaegbu said...

This article talks about the unemployment rate and the many ways it is calculated. One way is called the U-6 rate. The U-6 is defined as total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force. What the means is that people who want full time jobs but cant find instead they can only find part time jobs. The U-6 dropped 10 percent, which was a good thing because its down 170 basis points, while the U-3 is only down 80. In September of 2015 there were 142,000 jobs added, although that seems a lot it was only two percent higher than September of 2014. When unemployment rates decline, average wages typically go up and employers have to compete for a smaller pool of jobs.

Anonymous said...

This article speaks about the topic of unemployment. In the United States, the actual unemployment rate isn't the one most people look to. That's because it isn't as accurate and doesn't include all of the factors. Unemployment is measured in two different ways. U-6 and U-3. U-6 is a more accurate measure of unemployment because unlike U-3, where just unemployment is discussed, U-6 also incorporates under-employed people, discouraged workers and part time workers. These are people who are qualified for better jobs but are working under their maximum abilities. Discouraged workers are people whom don't want to go out and look for a job because they don't have the drive or capability. Therefore the 'real' unemployment rate that is displayed to the public, isn't the actual amount of people that are unemployed, underemployed, or part time workers. This means that even if jobs are added, the change to unemployment might not be too influential because of the people who are still discouraged workers or underemployed.

-Nick Arciszewski

nikolas fountis said...

This article that was given to us speaks about unemployment rate but it also shows us how there are numerous ways to calculate and look at the unemployment rates. Although there is an actual unemployment rate there is two ways to look and find answers about this topic such as the U-6 and the U-3. These allow more specific and accurate information to be provided. Even though they both seem to be accurate I think that the more specific and accurate one to look at is the U-6 due to the fact that U-6 talks about the unemployment along with discouraged workers and also workers who don't work full time aka part time workers. also a factor that plug into the U-6 is the underemployed. some people in this society don't feel like they can succeed which prevents them from going out and competing which puts them under discouraged workers. The U-6 puts that into consideration and that allows it to become more accurate.

-Nikolas Fountis

Anthony Zullo said...

There are many different ways to calculate unemployment in the United States. There is an unemployment rate, there is a U-6 and U-3 charts. These charts include not only the un employed but also tell the story about under employed, discouraged workers and part time employees. These statistics are important because it shows the way jobs are pursued and how many people are not maxing there potential. The under employed means people that have the intelligence and standards for a higher position job but settle for a maybe more convenient yet lower paying job. Surprisingly, as jobs increase and unemployment drops paying wages increase because of the competition for jobs. That is something I didn't put much thought into until reading this article. The better wages the more people are going to strive for that job so if unemployment is down and a job needs to be filled the only way to stand out is a higher wage than other jobs. The U-6 graph is the best researched graph for unemployment because it factors in unemployment, underemployment, pat time workers and more working world habits.

Anonymous said...

I believe when talking about unemployment, the U-6 chart should be refered to well over the U-3 chart. The U-6 shows all the different sides of not just unemployment, but also under employed, discouraged, and part times workers. Showing those other factors are important because it helps take into consideration how many people are struggling financially. I think when hearing about unemployment, the U-3 chart is the one referenced more often because it makes the unemployment rate sound less worse then the reality of it is. All in all, both charts have parts that can be argued as unreliable, so taking both into consideration when looking at unemploypent will give the most accurate answer.

- Matthew Golden

Anonymous said...

The article speaks about the unemployment rate and the ways to calculate unemployment. There are two ways to calculate unemployment, U-6 and U-3. Both ways provide accurate information, but I believe the U-6 is more specific. The U-6 calculates the unemployed, part-time employees, discouraged employees, and the underemployed. The U-6 rate is usually higher than the main unemployment rate graphically because the U-6 takes so many more factors into account. I think the U-6 is a more efficient way to calculate the unemployment rate because of all the factors that are calculated.

-Jane Kasparian

Anonymous said...

This article basically just summarize what economist chose to see not what the reality it. They only that into account the u-6 when determining what the unemployment rate is. They are basically saying even u have a 3 hour job it does not count as unemployment therefore not taking into account the u-3. But what they fail to see that with even a 3 hr job sometimes it doesn't meat ends meet. So therefore it should be considered unemployed. The reality meaning that they are trying to cover up the real issue of employment by adding everything together to get people to think hat things are looking better and that they are handling thing but reality economist chose to see things their way and what most likely benefits them. With that been estate we ant be for sure what the real unemployment rate is till the correct number and graphs are shown.

- Manuel Llivisaca

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