PHIL DRAKE | Montana Watchdog

HELENA – While the most recently released unemployment rate for Montana was 6.3 percent, the federal government does have statistics that show a rate that is more than double, for those interested in how deep the recession knife has cut into the workforce.

The U.S. Bureau of Labor Statistics has several categories to measure the number of people out of work with the broadest measure, known as U-6, putting the unemployed at 14.3 percent for the second quarter of 2012.

The U-6 rate is the broadest measure. According to the Bureau, it consists of total unemployment plus “marginally attached workers, plus total employed part time for economic reasons.”

The national U-6 rate is 15.3 percent, according to the Bureau. For the same quarter the previous year, the national U-6 rate was 16.3 and Montana’s was 14.9, according to the Bureau.

Those are the numbers that Barbara Wagner, senior economist for the state Department of Labor and Industry, says that people should keep their eye on.  “It doesn’t matter what the number is, what’s important is if it is higher or lower than it was before and how it compares with other places,” she said.  “We are definitely coming down in unemployment rates.”

There are six alternative measures of “labor underutilization.” In part, they are:

• U-1 is for people employed 15 weeks or longer (2.8 percent for Montana vs. 4.9 percent nationally);
• U-2 are job losers and people who completed temporary jobs (3.6 percent in Montana vs. 4.8 percent nationally);
• U-3 is used for the official unemployment rate. It’s the total unemployed as a percent of a the civilian labor force (6.5 percent in Montana vs. 8.5 percent nationally);
• U-4 is the total unemployed plus discouraged workers (6.8 percent in Montana vs. 9.1 percent nationally);
• U-5 is total unemployed plus discouraged workers plus all other marginally attached workers (7.7 percent in Montana vs. 10 percent nationally);
• As stated earlier, U-6 is total unemployment plus marginally attached workers, plus total employed part time for economic reasons. These are people who work less than 35 hours per week but want to work full time. They also gave an economic reason, such as reductions in hours or unable to find a full-time job, for working part time.

The Bureau defines “discouraged workers” as people not in the labor force, but want and are available for work, and had looked for a job in the prior year. They are not counted as unemployed because they didn’t look for work in the prior month because they didn’t think jobs were available to them.

According to the Bureau, North Dakota had the lowest rate for all six measures. Nevada reported the highest rates.
All six measures decreased from the same period a year earlier, the Bureau reported. Rhode Island was the only state to have an increase during the same period for all six measures.

Wagner said the six rates, for the most part, show the same information.  “People who are looking for an eye-opening number always pop out a U-4, U-5 or U-6,” she said. “The U-6 is always that high.”  She said the U-6 rate was the most helpful because it includes the people who are part-time workers for economic reasons. And it is more volatile as it often serves as an indicator of a recession; management facing tough times often cuts back on employee hours before laying people off.  “That tends to be a leading indicator,” she said.  She said the use of the rates came up in the 2011 legislative session, when there was some discussion on what was the best rate to measure unemployment in the state.

Wagner said the U-3 rate has been the “headline” rate since the 1930s, with the other rates added over the years. State level unemployment rates started in 1976.

Montana Watchdog

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