Top x American

Market participants, as well as the broader economy, take cues from the U-3 “official” unemployment rate which currently stands at 9.5%. This metric is an inaccurate gauge of the labor markets however, as U-3 does not account for marginally attached workers, discouraged workers, and the number of part-time employees.

• Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.
• Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job.
• Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.

The data that should be used is the U-6 number which incorporates these substantial groups of Americans. According to U-6 data, the true unemployment rate is currently hovering around 16.5% (a seven percentage point difference!). Unfortunately, some believe that even the U-6 estimate is inaccurate as U-6 does not reflect all of the discouraged workers in the country. These analysts peg “real” unemployment over 20%.