jan. 2013: bureau of labor statistics alternate measures of unemployment and underemployment

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Alternative Measures of Labor Underutilization for States,

2012 Annual Averages

Six alternative measures of labor underutilization have long been available on a monthly basis from the

Current Population Survey (CPS) for the United States as a whole. They are published in the Bureau of

Labor Statistics' monthly Employment Situation news release. (See table 15.) The official concept of

unemployment (as measured in the CPS by U-3 in the U-1 to U-6 range of alternatives) includes all

jobless persons who are available to take a job and have actively sought work in the past four weeks.

This concept has been thoroughly reviewed and validated since the inception of the CPS in 1940. The

other measures are provided to data users and analysts who want more narrowly (U-1 and U-2) or

broadly (U-4 through U-6) defined measures.

BLS is committed to updating the alternative measures data for states on a 4-quarter moving-average

basis. The analysis that follows pertains to the 2012 annual averages. Data are also available for prior

time periods back to 2003.

The six state measures are based on the same definitions as those published for the United States:

U-1, persons unemployed 15 weeks or longer, as a percent of the civilian labor force;

U-2, job losers and persons who completed temporary jobs, as a percent of the civilian labor force;

U-3, total unemployed, as a percent of the civilian labor force (this is the definition used for the

official unemployment rate);U-4, total unemployed plus discouraged workers, as a percent of the civilian labor force plus

discouraged workers;

U-5, total unemployed, plus discouraged workers, plus all other marginally attached workers, as a

percent of the civilian labor force plus all marginally attached workers; and

U-6, 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.

Definitions for the economic characteristics underlying the three broader measures of labor

underutilization are worth mentioning here. Discouraged workers (U-4, U-5, and U-6 measures) are

persons who are not in the labor force, want and are available for work, and had looked for a job

sometime in the prior 12 months. They are not counted as unemployed because they had not searchedfor work in the prior 4 weeks, for the specific reason that they believed no jobs were available for them.

The marginally attached (U-5 and U-6 measures) are a group that includes discouraged workers. The

criteria for the marginally attached are the same as for discouraged workers, with the exception that any

reason could have been cited for the lack of job search in the prior 4 weeks. Persons employed part

time for economic reasons (U-6 measure) are those working less than 35 hours per week who want to

work full time, are available to do so, and gave an economic reason (their hours had been cut back or

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they were unable to find a full-time job) for working part time. These individuals are sometimes referred

to as involuntary part-time workers.

Generally, all six measures of labor underutilization move together over time, including across business

cycles. Similarly, states that have high unemployment rates tend to have high values for the other five

measures; the reverse is true for states with low unemployment rates. Note that, in the table and in the

comparisons below, the unemployment rates (U-3) that are shown are derived directly from the CPS,

because this is the only source of data for the various components of the other five measures. As a

result, these U-3 measures may differ from the official state unemployment rates for the same period.

The official rates are developed from statistical models that greatly improve the reliability of the top-side

labor force and unemployment estimates. Those models, developed by the Local Area Unemployment

Statistics (LAUS) program, incorporate CPS estimates, as well as input data from other sources. The

model-based estimates are accessible through the LAUS program homepage. The official model-based

annual averages for 2012 will be released on March 1, 2013.

Alternative measures of labor underutilization by state, 2012 annual averages(percent)

State

Measure

U-1 U-2 U-3 U-4 U-5 U-6

United States 4.5 4.4 8.1 8.6 9.5 14.7

Alabama 4.6 4.5 8.0 8.6 9.6 13.5

Alaska 3.1 4.1 7.4 8.1 8.9 13.0

Arizona 3.9 4.0 8.2 8.8 9.8 15.9

Arkansas 3.4 3.6 7.6 7.9 8.9 13.0

California 6.2 5.8 10.4 11.1 12.2 19.3

Colorado 4.2 4.5 8.1 8.4 9.3 14.6

Connecticut 5.3 5.2 8.4 9.0 9.8 14.7

Delaware 4.2 4.3 7.2 7.7 8.7 13.9

District of Columbia 6.1 4.3 9.0 9.5 10.7 14.1

Florida 5.4 4.9 8.4 9.3 10.1 16.0

Georgia 5.4 4.4 9.1 9.9 10.7 15.7

Hawaii 3.3 3.2 6.0 6.4 7.5 12.8

Idaho 3.6 3.2 7.1 7.4 8.3 14.0

Illinois 5.3 4.9 8.7 9.3 10.0 16.0

Indiana 3.9 4.6 8.3 8.6 9.3 14.2

Iowa 2.3 2.6 5.1 5.3 6.1 10.0

Kansas 2.6 2.8 5.6 5.9 6.7 10.2

Kentucky 3.9 4.3 8.0 8.4 9.2 13.8

Louisiana 3.9 3.0 7.1 7.6 8.5 11.9

Maine 3.9 4.4 7.7 8.0 9.3 15.0

Maryland 3.9 3.8 7.0 7.6 8.5 12.1

Massachusetts 3.7 3.9 6.7 7.2 7.9 12.9

Michigan 5.2 5.0 9.1 9.8 11.0 16.6

Minnesota 2.7 3.1 5.8 6.0 6.9 11.7

Mississippi 5.0 4.4 8.9 9.4 11.1 15.1Missouri 3.5 4.1 6.9 7.3 8.0 12.5

Montana 2.6 3.1 6.1 6.4 7.0 13.7

Nebraska 1.7 1.9 4.0 4.3 4.7 8.8

Nevada 6.4 6.3 11.0 11.9 13.3 20.3

New Hampshire 2.9 3.3 5.6 6.0 6.7 11.2

New Jersey 5.9 5.9 9.5 10.1 11.0 15.7

New Mexico 3.9 3.4 7.1 7.5 8.8 14.1


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State

Measure

U-1 U-2 U-3 U-4 U-5 U-6

New York 5.5 5.0 8.7 9.3 10.3 14.9

North Carolina 5.7 5.0 9.2 9.6 10.7 16.3

North Dakota 1.0 1.5 3.2 3.4 3.9 6.1

Ohio 3.7 3.8 7.2 7.7 8.6 13.6

Oklahoma 2.2 2.9 5.1 5.4 6.3 9.6

Oregon 4.2 5.1 8.9 9.1 10.1 17.2

Pennsylvania 4.3 4.7 7.8 8.3 9.2 13.9

Rhode Island 6.3 6.6 10.5 10.9 11.8 17.6

South Carolina 5.4 4.9 9.4 10.1 11.2 15.8

South Dakota 1.4 2.0 4.6 4.9 5.5 8.5

Tennessee 4.2 4.4 7.8 8.4 9.1 13.3

Texas 3.3 3.3 6.7 7.1 7.8 12.1

Utah 2.7 3.0 5.8 6.2 6.8 11.2

Vermont 2.1 2.9 5.1 5.4 6.3 11.0

Virginia 3.2 2.8 6.0 6.5 7.3 11.7

Washington 4.3 4.7 8.3 8.7 10.1 16.9

West Virginia 3.9 4.1 7.4 7.9 8.5 13.1

Wisconsin 3.5 4.0 7.1 7.5 8.4 13.1Wyoming 2.1 2.5 5.5 5.7 6.4 10.0

Substate areas

Los Angeles County 6.4 5.8 10.9 11.5 12.6 20.8

New York City 6.6 5.5 9.4 10.3 11.4 15.8

In 2012, Nevada reported the highest rate for 5 of the 6 alternative measures of labor underutilization.

Nevadas rates ranged from a U-2 of 6.3 percent, the second-highest U-2 rate among states, to a U-6 of

20.3 percent, including a CPS-based unemployment rate, U-3, of 11.0 percent. Rhode Island reported

the highest U-2 rate, 6.6 percent. For U-1 and U-3 through U-6, the next highest rates were recorded in

California and Rhode Island, including U-3 rates of 10.4 and 10.5 percent, respectively.

North Dakota continued to record the lowest rates for all six measures. North Dakotas rates ranged

from a U-1 of 1.0 percent to a U-6 of 6.1 percent, including a U-3 of 3.2 percent. Nebraska and South

Dakota had the next lowest rates for U-1 through U-6, though not in the same order for each measure,

including U-3 rates of 4.0 and 4.6 percent, respectively. The next lowest U-3 rates were registered in

Iowa, Oklahoma, and Vermont, each at 5.1 percent. These states also had among the lowest rates for

all of the other alternative measures in 2012.

In general, the alternative measures in any given state increase from U-1 to U-6, as they normally do at

the national level. However, 18 states and the District of Columbia, as well as the nation as a whole, had

U-1 measures that exceeded their U-2 rates in 2012. The largest of these gaps was reported in the

District of Columbia (-1.8 percentage points). As the economic recovery continues, consistent job

growth results in declining U-2 rates and a narrowing of the gap between the two measures. At the

national level, U-1 and U-2 were 4.5 and 4.4 percent, respectively, in 2012, while the two measures

were both at 5.3 percent a year earlier.

Florida and Nevada had the largest gaps between their U-3 and U-4 rates, +0.9 percentage point each.

The conceptual difference between U-3 and U-4 is that the latter includes discouraged workers. Thus,

the large gaps for these states are a reflection of their relatively high degrees of would-be job-seeker

discouragement. In contrast, five statesIowa, Minnesota, North Dakota, Oregon, and Wyominghad

gaps between their U-3 and U-4 rates of only +0.2 percentage point each, indicating relatively low


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incidences of discouragement. The U-3 rates for these five states range from 3.2 percent in North

Dakota to 8.9 percent in Oregon.

In addition to the marginally attached, who are included in U-5, involuntary part-time workers are

included in U-6. The larger the difference between U-5 and U-6, the higher the incidence of this form of

"underemployment." California and Oregon posted the largest gaps between their U-5 and U-6 rates,

+7.1 percentage points each, followed by Nevada, +7.0 points. North Dakota registered the smallest

difference between its U-5 and U-6 measures, +2.2 percentage points, indicating a comparatively low

degree of underemployment.

Overall, states experienced more declines than increases in the alternative measures relative to the prior

4-quarter average period, reflecting the continuing improvement in the national labor market.

Twenty-eight states and the District of Columbia showed improvement in U-1, the measure with the

fewest number of declines relative to the prior period; the largest U-1 improvement occurred in Nevada

(-0.8 percentage point). The measure with the most states registering decreases was U-5, where 40

states and the District of Columbia posted declines; the largest of these occurred in Nevada (-1.0

percentage point). Nevada also posted the largest declines in the remaining measures, with the

exception of U-6, for which it recorded a slightly smaller decline (-1.1 percentage points) than Idaho

(-1.3 points).

The U-1 and U-2 measures increased in 10 states each, the largest number of increases among the

alternative measures relative to the four quarters ending in September 2012. At the other extreme, U-4

and U-5 increased in only six states each. Connecticut, Delaware, and Utah were the only states to

experience over-the-quarter increases greater than 0.1 percentage point in any of the six alternative

measures. The largest increases recorded for each measure were: U-1, Connecticut and Utah (+0.2

percentage point each); U-2, Delaware (+0.2 point); U-3, Utah (+0.3 point); U-4 and U-5, Utah (+0.4

point for each measure); and U-6, Delaware (+0.3 point).

Declines relative to calendar year 2011 were even more prevalent than declines relative to the prior

4-quarter average period. Forty states and the District of Columbia reported decl ines in all six alternative

measures over the year. The measures with the most decreases were U-5 and U-6, with 47 states and

the District of Columbia showing improvements in these two measures over the year. The largest U-6

decline occurred in Alabama (-2.7 percentage points), followed by Nevada and South Carolina (-2.4

points each); the largest U-5 declines occurred in Nevada (-2.2 points) and Alabama (-2.0 points). U-1

registered the greatest number of increases among measures over the year, with four states posting

increases. The largest of these increases occurred in the New York (+0.5 percentage point). New York

was the only state not to experience a decline in any of the six alternative measures of labor

underutilization over the year.

Many states with extreme measures, either high or low, maintained their general place in the rankings

of alternative measures over the year. California, Nevada, North Carolina, and Rhode Island had rates

among the 10 highest for each measure in both 2012 and 2011. Similarly, Iowa, Nebraska, North

Dakota, Oklahoma, South Dakota, Vermont, and Wyoming had rates among the 10 lowest for each

measure in both years. These same seven low-rate states were also in the lowest 10 for each measure

in 2010.

The alternative measures for states are analyzed on a 4-quarter average basis in order to increase the

reliability of the CPS estimates, which are based on relatively small sample sizes at the state level, and

to eliminate seasonality. Due to the inclusion of lagged quarters, the state alternative measures may not

fully reflect the current status of the labor market.


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For additional information on state estimates derived directly from the CPS, see notes on subnational

CPS data.

Note: Some state rankings cited above include ties. Data are calculated from quarterly tables in which

the components of each measure are rounded to the nearest hundred. As a result, these measures

contain slightly more rounding error than that found in typical CPS annual average tabulations (in which

rates are calculated based on unrounded data). Due to small state sample sizes, neither monthly nor

quarterly state data from the CPS satisfy BLS publication standards.

The next issuance of the alternative measures of labor underutilization for states, covering the four

quarters ending in March 2013, is tentatively scheduled for Friday, April 26, 2013.

Last Modified Date: January 25, 2013

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jan. 2013: bureau of labor statistics alternate measures of unemployment and underemployment

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