The U-6 actual unemployment rate also includes the underemployed and the discouraged workers. The U-6 unemployment rate is usually higher than U-3, the most common rate reported by the media. Bureau of Labor Statistics counts only those without jobs that are in the labor force when calculating the U-3 rate. To remain in the labor market, they must have searched for a new job within the past four weeks.
The Numbers
- The U-6 rate of real unemployment is a more comprehensive definition than the U-3 official rate.
- The U-6 rate was 7.4% by November 2022. This is a slight increase from the 6.3% recorded in October 2022. Since December 2020, there has been a general downward trend. 1
- 2 3
The chart below shows a discrepancy in the unemployment rates (U-3 and U-6) between 1994 to 2021.
What does the real unemployment rate mean for you?
The U-3 unemployment rate does not include several categories of workers: marginally attached workers and discouraged workers.
Part-time workers are underemployed. They would rather have full-time work. They are counted as employed in the U-3 report.
They are not included in U-3 because they haven’t looked for work in the past year. They are not included in labor participation rate either.
You can get a better picture of current employment conditions by keeping an eye on real unemployment rates. This may help you make career or employment decisions.
Note:
In the monthly jobs report, the BLS publishes both the U-3 rate and the U-6 rate. The real unemployment rate is not as well-reported by the media.
How to Calculate the Real Unemployment rate
Three steps are required to calculate the real unemployment rate.
- To calculate the number unemployed or underemployed, add the number officially unemployed workers and those marginally attached to the total number of people who work part time for economic reasons.
- Add the number of workers actively employed to the number marginally attached.
- Divide the total number unemployed and underemployed by the total workforce, including marginally employed.
Comparing the Real Unemployment Rate
Over the years, the official rate of unemployment has always been slightly higher than the real rate. This is true regardless of how the economy does. In December 2020, the official unemployment rate will drop to 3.9%. The real rate of 6.9% remained unchanged. In October 2009, unemployment was at 10.0%, its highest level since the 2008 recession. However, the real rate was 17.1%, which is still much higher. 5
Note:
Since 1929 , the BLS has published a report on unemployment every year.
This chart puts everything in perspective. The chart below compares the official rate of unemployment to the real rate for the period 1994-2004, when the BLS began collecting data on U-6. The rates are given for each January. 2
| YEAR (AS OF JANUARY) | U-3 (OFFICIAL) | U-6 (REAL) | U-3 PERCENTAGE OF U-6 | Comments |
|---|---|---|---|---|
| 1994 | 6.6% | 11.7% | 56% | First year BLS reported U-6 |
| 1995 | 5.6% | 10.1% | 55% | |
| 1996 | 5.6% | 9.8% | 57% | |
| 1997 | 5.3% | 9.4% | 56% | |
| 1998 | 4.6% | 8.4% | 55% | |
| 1999 | 4.3% | 7.6% | 57% | |
| 2000 | 4.0% | 7.0% | 57% | Stock Market Crash in Mar |
| 2001 | 4.2% | 7.3% | 58% | |
| 2002 | 5.7% | 9.4% | 61% | U-3 is closest to U-6 |
| 2003 | 5.8% | 9.9% | 59% | |
| 2004 | 5.7% | 9.8% | 58% | |
| 2005 | 5.3% | 9.2% | 58% | |
| 2006 | 4.7% | 8.4% | 56% | |
| 2007 | 4.6% | 8.3% | 55% | |
| 2008 | 5.0% | 9.1% | 55% | |
| 2009 | 7.8% | 14.1% | 55% | The October High is 10.2% |
| 2010 | 9.8% | 16.6% | 59% | |
| 2011 | 9.1% | 16.1% | 57% | |
| 2012 | 8.3% | 15.1% | 55% | |
| 2013 | 8.0% | 14.5% | 55% | |
| 2014 | 6.6% | 12.6% | 52% | |
| 2015 | 5.7% | 11.2% | 51% | |
| 2016 | 4.8% | 9.7% | 49% | Both return to levels before the recession |
| 2017 | 4.7% | 9.2% | 51% | |
| 2018 | 4.0% | 8.0% | 50% | |
| 2019 | 4.0% | 8.0% | 50% | |
| 2020 | 3.5% | 6.9% | 51% | The COVID-19 Pandemic began in March |
| 2021 | 6.3% | 11.1% | 57% | |
| 2022 | 3.6% | 6.7% | 54% |
Compare the highest unemployment rates
3 Although unemployment rates were calculated differently in the past, they are likely to be similar to today’s real rate.
The official unemployment rate reached a high of 14.8% by April 2020. The actual unemployment rate including discouraged workers, marginally employed, and part-time workers was 22.9%. This could give a more accurate picture of the state of labor in 2020.
If you want to argue that the 2020 recession will be worse than the Great Depression , then it would take several years for the Great Depression to reach the level it did. The 2020 recession was almost as bad in a few months.
FAQs (Frequently Asked Questions)
What is the rate of underemployment for college graduates?
In December 2021 41.3% recent college graduates had underemployment or were working in jobs that didn’t require a degree. In total, 33.9% were underemployed. 7
What is the rate of unemployment for college graduates?
8 The number does not include college graduates who have been underemployed or are no longer seeking work.
