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January 18, 2018 

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REFERENCE WEEK: The calendar week (Sunday through Saturday) containing the 12th day of the month, which is used in the Current Population Survey (CPS) as the time period for documenting the employment and labor force status of respondents. The estimation of the unemployment rate and other employment information generated by the CPS are based on activities of survey respondents during this week. The actual survey is conducted by interviewers working for the Bureau of the Census during the calendar week containing the 19th day, which is termed the survey week.

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ALTERNATIVE UNEMPLOYMENT RATES:

The official unemployment rate estimated and reported monthly by the Bureau of Labor Statistics (BLS) using data from Current Population Survey is one of six alternative measures of unemployment tracked and reported by the BLS, officially labeled sequentially U1 through U6. The "official" unemployment rate is U3. The other five measures seek to document different ways in which labor can be under utilized, including unemployment duration, job losers, discouraged workers, marginal workers, and part-time workers.
The commonly reported, "official" unemployment rate is one of six unemployment rates compiled by the Bureau of Labor Statistics. The other five take into consideration other dimensions of unemployment, including part-time employment, discouraged workers, and length of unemployment.

Here is an overview of these six measures.

  • U1: This is the proportion of the civilian labor force that has been unemployed for 15 weeks or longer. This unemployment rate measures workers who are chronically unemployed. During business-cycle expansions, this rate captures structural unemployment. However, during lengthy business-cycle contractions, this rate is also likely to include a significant amount of cyclical unemployment. U1 tends to be relatively small, in the range of 1-2 percent.

  • U2: This is the proportion of the civilian labor force that is classified as job losers (workers who have been involuntarily fired or laid off from their jobs) and people who have completed temporary jobs. During business-cycle expansions, this rate is likely to capture some degree of frictional unemployment. However, during business-cycle contractions, this rate is most likely to consist of cyclical unemployment. U2 is larger than U1, but still remains substantially less than the official unemployment rate (U3).

  • U3: This is the official unemployment rate, which is the proportion of the civilian labor force that is unemployed but actively seeking employment.

  • U4: This is the official unemployment rate that is adjusted for discouraged workers. In other words, discouraged workers are treated just like other workers who are officially classified as unemployed, being included in both the ranks of the unemployed and the labor force. It is technically specified as the proportion of the civilian labor force (plus discouraged workers) that is either unemployed but actively seeking employment or discouraged workers. The addition of discouraged workers generally adds a few tenths of a percentage point to the official unemployment rate.

  • U5: This augments U4 by including marginally-attached workers to the unemployment rate calculation. Marginally attached workers are potential workers who have given up seeking employment for various reasons. One of these reasons is that the workers believe such effort would be futile, which places them in the discouraged worker category. Those who have other reasons for not seeking employment are placed in the broader marginally-attached workers category. The addition of marginally-attached workers adds a few more tenths of a percentage point to the official unemployment rate.

  • U6: This augments U5 by including part-time workers to the unemployment rate calculation. The addition of part-time workers adds a full 2-3 percentage points to the official unemployment rate. This measure of unemployment is perhaps the most comprehensive measure of labor resource unemployment available.

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Recommended Citation:

ALTERNATIVE UNEMPLOYMENT RATES, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: January 18, 2018].


Check Out These Related Terms...

     | discouraged workers | marginally-attached workers | part-time workers | unemployment rate, measurement problems | Current Population Survey | Bureau of Labor Statistics | labor force | civilian labor force | employment rate | employment-population ratio | labor force participation rate | employed persons | unemployed persons | not in the labor force |


Or For A Little Background...

     | unemployment | unemployment rate | unemployment sources | macroeconomic problems | macroeconomic goals | factors of production | full employment | business cycles | contraction | expansion |


And For Further Study...

     | natural unemployment | unemployment problems | unemployment reasons | unemployment, production possibilities | full employment, production possibilities | macroeconomic sectors | gross domestic product | macroeconomic markets | resource markets | inflation | stabilization policies | government functions | underground economy | business cycle indicators |


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     | Bureau of Labor Statistics |


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