Alternative Unemployment Stats Paint Different Economy

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Story by Michael Bielawski, from the BenNetwork.com

According to the US Bureau of Labor Statistics U-3 measure of
unemployment, the Northeast economy is doing relatively well with
jobless rates ranging from 4.3 percent in Vermont and New Hampshire to
7.7 for Rhode Island. However U-3 is just one of six BLS criteria for
calculating unemployment, another is U-6 which makes that range become
8.8 percent for Vermont to 13.5 percent for Rhode Island.

“U-3 is the traditional one and the one that’s maybe better suited
for the past economy that it is for today,” said University of
Massachusetts Economics Professor Gerald Friedman. “Now it might not
have been that bad in 1955, but it’s definitely inadequate today. The
difference is U-3 counts people who are actively looking for work, but
not finding it, divided by the total labor force.”

U-3 does not include people working part-time (under 35 hours a week)
who want full-time or people who are discouraged (haven’t applied
somewhere within four weeks of the BLS survey) and have given up.

“What you see is the U-3 measure actually falling in times when the
U-6 measure is staying high or even rising, because when people give up
looking for work they drop out of the U-3,” said Friedman. “Or if they
give up looking for full-time work but settle working part-time, then
they drop out of U-3. They are employed as far as U-3 is concerned, but
they still show up as underemployed in U-6.”

Read more here…

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