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Regional labor utilization trends

Growing up in the 1980s, I was naturally a big fan of U2. Although I still listen to their older stuff, I have to admit that today I am a bigger fan of U-6. Let me explain.

Alternative measures of labor utilization shed additional light on current unemployment trends. One such measure is known as U-6, which includes the total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers. Persons marginally attached to the labor force are those 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 past 12 months. Discouraged workers—a subset of the marginally attached—have given a job market–related reason for not currently looking for work. 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.

To put U-6 into perspective, keep in mind that the standard unemployment rate is calculated by measuring the total number of unemployed among the civilian labor force. Therefore the alternative measure of U-6 gives a much broader view of unemployment trends. U-6 data, and other less extensive measures of underemployment, are published by the U.S. Bureau of Labor Statistics and can be found here.

National U-6 data go back to 1994 and are available on a monthly basis. No monthly measures are released on a state-by-state basis. However, quarterly alternative measures of labor underutilization by state have history available back to the first quarter of 2009. In addition, U-6 data are available on an annual basis for states. Data for the third quarter of 2010 were released last week.

The table (see below) shows the U-6 alternative measure for Sixth District states. Each state has experienced a significant increase in this broader measure of unemployment, as has the United States as a whole. The data points in blue represent the trough in U-6, while the red markers indicate the peak. In Florida, Georgia, and Louisiana, the current reading in the third quarter of 2010 represents the highest point measured to date. Florida is worst off, with a 13 percentage point increase from the low point of 6.2 percent in 2006 to its current rate of 19.2 percent. To put this increase into perspective, in 2006 roughly six out of 100 persons were considered underemployed. By the third quarter of 2010, that ratio had jumped to nearly one in five.


Tennessee has seen the largest decline in its broad underemployment measure. After increasing from 8 percent in 2007, the state's U-6 measure rose to 18.6 percent in the fourth quarter of 2009 but has since fallen to 17.2 percent. In the third quarter of 2010, Louisiana had the lowest U-6 rate in the region at 12 percent, but as noted above this reading is at its peak. The charts below show the evolution of both U-6 and the unemployment rate for each state in the Sixth District.

Taken as a whole, these broader measures of labor utilization by state show that like the traditional measure of unemployment, rates have risen significantly, and even in states that have seen their U-6 measure drop recently, they remain at very high levels. While the declines are good news, as far as finding proof that labor markets are improving—well, as Bono might say, "We Still Haven't Found What We're Looking For."

By Michael Chriszt, an assistant vice president in the Atlanta Fed's research department


November 3, 2010 in Employment | Permalink


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