Unemployment is low, but that's only part of the story
These should be the best of times for working people.
After all, the unemployment rate is just 3.7 percent, near its lowest level in almost 50 years. If that were our only guide, then we might conclude that virtually every adult in the United States who wants to work is either doing so or is diligently looking for a job.
The problem is that the unemployment rate, which is publicly updated by the Labor Department on the first Friday of every month, is an insufficient statistic, despite all the attention it gets. Sure, it tabulates the number of men and women who are actively job-hunting. But it leaves out the growing numbers who have stopped actively looking.
In the federal government’s scheme of things, those who stop looking for work aren’t listed as unemployed. The Labor Department has a broader monthly statistic that accounts for the dropouts, but it doesn’t get equal billing with the unemployment rate. It is called the labor force participation rate, and if it received the attention that it deserves, then the June job numbers, published and broadcast in early July, would have been stripped of some of the glow they seemed to have.
A more complete approach — and, under current conditions, a more accurate one — would give equal billing to both statistics: The unemployment rate was only 3.7 percent in June, near its lowest level since 1969, as tens of thousands of people gave up actively looking for another job. But in doing so, the dropouts meant the labor force participation rate was stuck at 62.9 percent, near its lowest level since 1977.
Most accounts of the June job numbers didn’t use that double-barreled, and sobering, approach to reporting the figures. Yet a falling participation rate suggests a growing accumulation of men and women who are neither working nor unemployed, but rather disengaged.
For example, if 300 people look for work — thus participating in the labor force — and 290 find jobs, then the unemployment rate is just 3 percent (10 divided by 300). Going a step further, let’s posit that an additional 300 people would like jobs but aren’t actively hunting, or so they tell government pollsters conducting the monthly household survey on which the employment figures are based.
https://www.msn.com/en-us/money/markets/unemployment-is-low-but-thats-only-part-of-the-story/ar-AAEbMyL?li=BBnbfcN
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When you take participation rate into account, it's not a pretty picture.
Alternate Unemployment Charts
The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.
The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.
