Under-Employment Over The Long Term

by: Tim Iacono

There was much discussion today about the falling labor market participation rate and how it’s more likely that an unemployed worker will fall out of the labor force than find a new job. Charts at Zero Hedge and EconomPicData provided some compelling evidence that the U.S. job market is still very sickly.

Here’s another way to look at that same problem of discouraged workers and the under-employed via the Labor Department’s U6 measure of underemployment:

U5 Underemployment

Unfortunately, this data only goes back to 1994 – I’d love to see what it looks like going back much further…

From the peak of 17.2 percent in late-2009, U6 has dropped 2.7 percentage points to a recovery low of 14.5 percent last month whereas, the official unemployment rate (or U3) has fallen 1.9 percentage points from 10.0 percent to 8.1 percent, a much bigger improvement in terms of the number of people affected.