Why the real unemployment rate is 15.6 %

In case you missed it, AEI economist Aparna Mathur and economic researcher Matt Jensen find that:

  • The official US unemployment rate hovers around 8.6 percent (8.5 % as of today), but a better measure of the real jobless rate is called the “U-6” which stands at 15.6 percent (15.2 percent as of today). The U-6 rate includes those that would still like a job and have looked for work in the last twelve months, not just the last four weeks. That means the number of Americans hurt by the bad economy is almost twice what the official number would suggest.
  • In fact, the official rate excludes workers who have decided to drop out of the labor market altogether -- either because they are discouraged or for other reasons -- and also ignores workers who settle for part-time work because they are unable to find a full-time job.
  • Currently more than 5.6 million Americans, or an astounding 43 percent of all unemployed have been unemployed for more than 27 weeks. The tremendous increase in long-term unemployment is one factor driving the unprecedented disparity between the official measure of unemployment and the alternative measure (U-6). Long-term unemployment has a damaging psychological impact on workers' willingness to keep searching for work and motivates them to accept part-time work.
  • As bad policy from Washington forces businesses to seek flexibility, the chasm between the U-6 and official unemployment rates may become a permanent fixture of the economic landscape.


The authors can be reached at aparna.mathur@aei.org and matt.jensen@aei.org. For media inquiries please contact Véronique Rodman at vrodman@aei.org or 202.862.4871

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About the Author

 

Aparna
Mathur
  • Aparna Mathur is an economist who writes about taxes and wages. She has been a consultant to the World Bank and has taught economics at the University of Maryland. Her work ranges from research on carbon taxes and the impact of state health insurance mandates on small firms to labor market outcomes. Her research on corporate taxation includes the widely discussed coauthored 2006 "Wages and Taxes" paper, which explored the link between corporate taxes and manufacturing wages.
  • Phone: 202-828-6026
    Email: amathur@aei.org
  • Assistant Info

    Name: Hao Fu
    Phone: 202-862-5214
    Email: hao.fu@aei.org

 

Matthew H.
Jensen
  • Matthew Jensen is a research associate for economic policy studies. He maintains an active research agenda focused on public finance and taxation, and he coordinates the ongoing development of AEI’s International Tax Database. Jensen has written for The Wall Street Journal, US News, and Tax Notes, among others, and he frequently appears on radio and television. Before joining AEI, he worked for a hedge fund in Minneapolis.


    Follow Matthew Jensen on Twitter.

  • Email: Matt.Jensen@AEI.org

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