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Concept: July 29, 2021. How Does the US Measure Unemployment?

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In a previous post we reviewed the concept of the Labor force (LF) and the Labor Force Participation Rate.

These concepts are important so that we can show the different measures of unemployment that the US uses.

  • U1: Percentage of the LF unemployed 15 weeks or longer.
  • U2: Percentage of the LF who lost jobs or lost temporary work.
  • U3: Percentage of the LF who does not have a job and are looking for a job within the past 4 weeks. This is the official unemployment rate.
  • U4: U3 plus discouraged workers (not looking for work because the believe they cannot find one).
  • U5: U4 plus marginally attached workers (they can work or would like to work, but have not looked for one recently)
  • U6: U5 plus part time workers.

This post is intended to only raise awareness. In order to make actual financial decisions please contact your financial advisor and/or tax advisor prior to making the decision.

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