Tallying the Unemployed: Where in the World is U-7?


Job seekers; photo by Justin Sullivan/Getty Images
Job seekers wait in line to meet with recruiters during a job fair in South San Francisco, California. Photo by Justin Sullivan via Getty Images.

Paul Solman frequently answers questions from the NewsHour audience on business and economic news on his Making Sen$e page. Here is Thurday’s query:

Martin Sawma: I recently looked at the Bureau of Labor Statistics website for the U-7 figure only to find that it was not being reported. Where is U-7 reported? I have been using the U-6 figures for my Ph.D. course work.

Making Sense

Paul Solman: U-7 is our own attempt at an inclusive tally of the under- and unemployed, distinguished from BLS categories by the modest title, “The Solman Scale.” As I wrote a couple of months ago, on the first Friday of every month, the government’s Bureau of Labor Statistics reports the unemployment data for the month before, based on two surveys. One is a mail-in survey of organizations that have employees on their payrolls and is thus called “the payroll survey.” That’s where the estimate of net jobs added (or lost) comes from.

The other is the one we use for our U-7 number, which we post that same morning as soon as I can perform what one Twitter follower recently called a “geek data dive.” The household survey is, well, a survey of American households — 60,000 of them — as BLS workers go door-to-door to administer in-person questions about work status.
The government reports six different unemployment numbers, from U-1 to U-6 here. The U-3 figure — “Total unemployed, as a percent of the civilian labor force” — is the official unemployment rate as reported by the BLS. The U-4 and U-5 numbers are more inclusive, adding “marginally attached” and “discouraged” workers who haven’t looked for work in the past four weeks but have looked in the past year. And U-6 adds in “those who want and are available for full-time work but have had to settle for a part-time schedule.”

So why did I feel we needed a U-7? Because so many workers have stopped looking for a year or more, say they want a job, as reported on the 9th line of the very first Table of data. There were about seven million such people in the month of August, millions more than the total for “marginal and discouraged” in U-5 or U-6.

In other words, U-7 is simply a reckoning of all Americans who say they want a full-time job, but do not have one. That total is now 27.4 million — just about 17 percent of the total potential workforce.

Conservative skeptics often ask if the number isn’t overstated. Might not many of these people be lying to the survey taker? Might they not really want a job? Might they be doing work under the table?

Liberal skeptics ask just the opposite question: Aren’t those without jobs often the hardest to find and thus excluded from the survey?

Both sides are surely right. How the numbers net out is anyone’s guess. But let’s never forget that, in historical terms, unemployment today is a lot higher than it has been for decades, higher even than the post-WWII peak of 1982 (10.8 percent). That’s because so many more Americans — as may as seven million — are now on Social Security disability or in prison. As we reported in 2003 and again in 2009, if those folks were beating the pavements for work, even the official U-3 number might rival 1982.

Look for our next U-7 the first Friday in January.

This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions