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The ‘real unemployment rate’ revisited

By Jonathan Sweet

Late last year, I wrote about the U-6 vs. U-3 unemployment rates from the Bureau of Labor Statistics that can offer a better view of unemployment.

(A quick recap: The U-3 is the headline number we see reported every month. It doesn't include those who are underemployed or those who have given up looking for a job. The U-6, on the other hand, is the U-3, plus those that are marginally attached, underemployed or discouraged. More details in the link above.)

With reports of the labor market tightening and wages increasing, it seemed a good time to revisit the topic. However, it looks like there has been little improvement for folks that want more employment, despite the higher household income reported in the Census Bureau report linked above.

Last November, the U-3 was at 5.0 percent. Since then (except for a dip to 4.7 percent in May) it has gone between 4.9 and 5.0 percent, where it stands in the most recent report. The U-6 has improved slightly to 9.7 percent in September from 9.9 percent in November 2015 (Note: the blog entry above says 9.6 percent because the BLS later adjusted those numbers).

So, so far, we're not seeing much movement like we would expect with wages increasing, based on past recoveries. It's worth noting, of course, that despite the headline number of a 5.2 percent increase in household income in 2015, the median HHI of $56,516 is still below the prerecession, inflation-adjusted $57,423 of 2007.

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