Broader Measure Of Unemployment Hits 16.5% In June
Earlier today, the Labor Department announced the U.S. unemployment rate rose to 9.5%, a 26-year high. Nonfarm payrolls shrank by 467,000. Could America’s labor woes possibly be any worse?
You bet.
This morning, Phil Izzo of the Wall Street Journal’s “Real Time Economics” blog wrote:
As job losses accelerated in June, the unemployment rate ticked up 0.1 percentage point to 9.5%, the highest level since August 1983.
But another more comprehensive gauge of unemployment also continued to tick up. The government’s broader measure, known as the “U-6″ for its data classification, hit 16.5% in June, 0.1 percentage point higher than March.
The comprehensive measure of labor underutilization accounts for people who have stopped looking for work or who can’t find full-time jobs. The index had posted a 0.6 percentage point jump in May. The pace of increase has begun to mirror the rise in the headline rate after soaring at higher pace earlier this year, possibly signaling that more workers are starting to look for jobs again.
Though the pace may be moderating, the figure still is the highest since the Labor Department started this particular data series in 1994. It’s also above a discontinued and even broader measure that hit 15% in late 1982, when the official unemployment rate was 10.8%. (That data series goes back to the 1970s.)
Painting an even bleaker picture, Izzo added:
Many forecasters expect the official unemployment rate to top 10% by the end of this year. The two indexes have begun to move closer in tandem as improving sentiment amid widespread talk of “green shoots” of recovery were bringing job seekers back to the market. However, this month that trend appears to be reversing as the participation rate declined.
Meanwhile, the number of long-term unemployed continues to rise, with 4,381,000 out of work for over 27 weeks, up from 3,948,000 last month. If those job seekers continue to be discouraged and stop looking for work they won’t be counted in the headline unemployment number. However, the broader jobless rate would move higher, and could easily top 18%. For people in this group, comparisons to the Great Depression (when 25% of Americans were out of work) may not look so wild even if overall economic activity is holding up better.
Source:
“Broader Unemployment Rate Hit 16.5% in June”
Phil Izzo
Wall Street Journal (Real Time Economics Blog), July 2, 2009















