U-6 (unemployment) rate

Definition

The U-6 (unemployment) rate is a comprehensive measure of the unemployment in the United States. 

What is the U-6 (unemployment) rate?

This rate is one of several measures of unemployment published by the U.S. Bureau of Labor Statistics (BLS). The U-6 rate includes not only unemployed individuals actively seeking work but also those who are marginally attached to the labour force and those who are employed part-time for economic reasons.

Here’s a breakdown of the components included in the U-6 unemployment rate:

• Unemployed (U-3 component): This component includes individuals who are actively seeking employment and are currently unemployed. 
• Marginally attached workers: These are individuals who are available and want to work but have not actively sought employment in the past four weeks. However, they have looked for work sometime in the past 12 months. 
• Part-time workers for economic reasons: This category includes individuals who are working part-time for economic reasons. These individuals are employed but would prefer full-time employment or have had their hours reduced due to economic reasons.

The U-6 rate is often used by economists, policymakers, and analysts to gain a deeper understanding of labour market dynamics. However, like any economic indicator, the U-6 rate has its limitations and may not capture every aspect of labour market dynamics.

Example of the U-6 (unemployment) rate

Let’s say a country, “AlphaLand,” has the following labour force statistics:

• Total civilian labour force: 10,000 people
• Number of unemployed individuals: 800 people
• Number of marginally attached workers: 200 people
• Number of part-time workers for economic reasons: 400 people

Now, we can calculate the U-6 rate:

U-6 rate = (Total number of unemployed workers / Total civilian labour force) x 100

U-6 rate = ( (800 + 200 + 400) / 10,000) x 100 = 14%

This indicates that 14% of the total civilian labour force is either unemployed, marginally attached to the labour force, or working part-time for economic reasons.