Bob was laid off last year. For six months he sent off resumes, scoured the want ads, and sought job leads from friends and family. But he couldn’t find anything — not an uncommon story, given the economy. Discouraged, he took a break from active job hunting and went to spend six weeks with his aging mother in Montreal, where there’s Obamacare, and poutine.
Bob is unemployed, right?
Wrong.
According to the federal government’s employment statistics, which are released each month and picked apart ad nauseum by the media, Bob is no longer unemployed.
Because he has not actively sought work within the past four weeks, he is now considered “out of the labor force” — a separate category which is not counted in the official unemployment rate.
Four weeks. Forget to send out a batch of resumes, and — although you are clearly suffering the effects of the Great Recession — you are no longer counted in the number that counts.
Why four weeks? Perhaps there’s some behavorial, economic, or other logic to this rule? Nope. Turns out it’s just an artifact of history — and politics — that has gone unchanged since 1878, when the guy who became the inaugural director of the Bureau of Labor Statistics cooked it up, as recounted in a 2008 column by David Leonhardt.
It took nearly a hundred years, until the 1970s, for the Bureau to acknowledge that this measure wasn’t capturing the full picture. But rather than change it, they took the less controversial step of introducing five “alternative measures of labor underutilization.”
Here are the most recent stats for each of these measures. The most comprehensive measure, dubbed U6, includes workers like Bob, and pegs the unemployment rate for August at 16.2%.
Why not make U6 the official rate? It would be a dose of truth for the political-media world that most of America is already too well aware of. Join my Twitter campaign: Up with U6!
Does u6 include prisoners? And how does it compare to europes method of calculating unemployment?