This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

How Many Are Out of Work, Really?

Using my proposed definition of unemployment, this means that the unemployment rate is currently 15.7% before we even count the people in the labor force that are not working at all. Add this to the official unemployment rate of 9.4% and the unemployment rate right now is 25.1%.

If you include all the unemployed that are part of the U6 estimate the unemployment rate is even larger. It's not appropriate to directly add my 15.7% to the 16.4% U6 number because U6 includes adjustments for people who are working part-time "for economic reasons." Those people want full-time work and can't get it. Making the direct addition would double count the unemployed, or underemployed, in that group.

The following graph shows how the official unemployment rate (U3) and my proposed measurement (called implied total unemployment) have performed since 1964. It is commonly suggested that "full employment" might be near 4% to 5%, using the U3. The argument goes that if U3 is as low as 3% unhealthy stress in the labor market would lead to economic dislocations. It's natural in a vibrant economy to always have around one in 20 in transition between jobs. The graph shows that the periods of "full employment" over the last 45 years have all seen close to 5% U3 unemployment.

The proposed implied total unemployment measurement, however, has increased from 7% to 9% unemployment during "full employment" in the 1960s to 17% to 19% since 1980. Obviously, more people have been working part-time in the last 28 years and in good economic times a significant percentage of those may have been part-timers by choice. For this reason, the implied total unemployment I propose is really a theoretical limiting value and, for practical use, should be adjusted by removing the unemployment imputed for part-time work that is part-time by worker choice.

Official vs. Implied Unemployment
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
TSLA $236.62 2.80%
YHOO $33.54 -0.80%
AAPL $117.50 -0.68%
FB $106.25 1.90%
GOOG $760.16 2.40%


Chart of I:DJI
DOW 17,820.24 +100.32 0.57%
S&P 500 2,092.06 +11.65 0.56%
NASDAQ 5,131.4460 +22.78 0.45%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs