Real Unemployment Rate With Calculations
Does the Government Lie About Unemployment?
The real
unemployment rate (U-6) is a broader definition of unemployment than the official unemployment rate (U-3). In September 2018, it was 7.5 percent.
The U-3 is the rate most often reported in the media. In the U-3 rate, the
Bureau of Labor Statistics only counts people without jobs who are in the labor *******. To remain in the labor *******, they must have looked for a job in the last four weeks.
The U-6, or real unemployment rate, includes the underemployed, the
marginally attached, and
discouraged workers. For that reason, it is almost double the U-3 report.
Underemployed people are part-time workers who would prefer full-time jobs. The BLS counts them as employed and in the labor *******.
The marginally attached are those who have looked for work in the last year but not the previous four weeks. They are not included in the labor ******* participation rate.
Among the marginally attached are the
discouraged workers. They have given up looking for work altogether. They could have gone back to school, gotten pregnant, or become disabled. They may or may not return to the labor *******, depending on their circumstances. Once they haven't looked for a job in 12 months, they're no longer counted as marginally attached.
The BLS issues both the U-3 and the U-6 in each month's
jobs report. Surprisingly, there isn't as much media attention paid to the real unemployment rate.
But even former Federal Reserve Chair
Janet Yellen said it paints a clearer picture of actual U.S. unemployment.
Real Unemployment Rate Formula Using Current Statistics
In September 2018, the real unemployment rate (U-6) was 7.5 percent. It's almost double the widely reported unemployment rate (U-3) of 3.9 percent.
Here's how to calculate both.
Step 1. Calculate the official unemployment rate (U-3).
U-3 = 5.964 million unemployed workers / 161.926 million in the labor ******* = 3.7 percent.
Step 2. Add in marginally attached workers. There were 1.577 million people who were marginally attached to the labor *******. Add this to both the number of unemployed and the labor *******.
U-5 = (5.964 million + 1.577 million) / (161.926 million + 1.577 million) = 7.541 million / 163.503 million = 4.6 percent.
Step 3. Add in part-time workers. There were 4.642 million people who were working part-time but would prefer full-time work. Add them to the unemployed with marginal workers. They're already in the labor *******.
U-6 = (7.541 million + 4.642 million) / (163.503 million) = 12.183 million / 163. mil503lion = 7.5 percent. (Source: "
Table A-15," Bureau of Labor Statistics.)
Compare the Real Unemployment Rate
To put things in perspective, here's the official unemployment rate compared to the real rate since 1994. That’s the first year the BLS collected data on U-6. The rates given are for January of each year. To see unemployment since 1929, go to
Unemployment Rate by Year.
Throughout the years, the official rate is a little more than half the real rate.
That remains true no matter how well the economy is doing. Even in 2000, when the official rate below the
natural unemployment rate of 4.5 percent, the real rate was almost double, at 7.1 percent.
In 2010, when the unemployment rate was its highest at 9.8 percent, the real rate was still almost double, at 16.7 percent.
Year (as of January) U3 (Official) U6 (Real) U3/U6 Comments
1994 6.6%11.8%56%The first year BLS reported U6
1995 5.6%10.2%55%
1996 5.6%9.8%57%
1997 5.3%9.4%56%
1998 4.6%8.4%55%
1999 4.3%7.7%56%
2000 4.0% (Record Low)
7.1%56%
Stock market crashed in March
2001 4.2%7.3%58%
2002 5.7%9.5%
60%U3 closest to U6
2003 5.8%10.0%58%
2004 5.7%9.9%58%
2005 5.3%9.3%57%
2006 4.7%8.4%56%
2007 4.6%8.4%55%
2008 5.0%9.2%54%
2009 7.8%14.2%55%
High of 10.2% in Oct
010 9.8%16.7%59%
2011 9.1%16.2%56%
2012 8.3%15.2%55%
2013 8.0%14.5%55%
2014 6.6%12.7%52%
2015 5.7% 11.3% 50%
2016 4.9% 9.9%49%Both return to pre-recession levels
2017 4.8% 9.4%51%
2018 4.4% 8.2%50%
The point is to make sure you compare apples to apples. If you say the government is lying during a recession, then you've got to make the same argument when times are good. (Source: “
Table A-1. Historical Household Data,” Bureau of Labor Statistics.)
The Real Unemployment Rate Was Never as Bad as During the Depression
The unemployment rate during the
Great Depression was 25 percent. Unemployment rates were calculated differently back then, but this was likely similar to the real rate today. Did the real unemployment rate during the
Great Recession ever reach that level? Despite what many people say, a simple calculation shows this is not true.
In
October 2009, the official unemployment rate (U-3) reached its height of 10.2 percent. There were 15.7 million unemployed among 153.98 million in the labor *******. Add to that the 2.4 million marginally attached, including 808,000 discouraged workers, and you get a U-5 rate of 11.6 percent. Then add in the 9.3 million part-time workers who preferred full-time, and you get the U-6 rate of 17.5 percent. That gives a better sense of 2009 unemployment.
Therefore, even if you stretch the definition of unemployed to include marginally attached and part-time workers, unemployment was never as bad as during the
height of the Great Depression. But, unemployment wasn't that high throughout the
entire Depression, which lasted for 10 years. If you wanted to make the case, you could say the real unemployment at the height of the Great Recession was as high as unemployment during
parts of the
Great Depression.
it's funny during his run for the president...he kept stating how all those numbers we not the real picture.....but funny how he likes those numbers now that he is in!
And having a job IS NOT making a living
Chris Edelson,MarketWatch 
Julie Bort,Business Insider
