March 11, 2010

Isn’t the real unemployment rate much higher than you say it is in your news quiz?

Q. The first question in your Political News IQ quiz asks which of four percentages is closest to the current national unemployment rate. According to you the correct answer is 10%. But isn’t the real unemployment rate much higher?

The 10% rate refers to the official government unemployment rate reported monthly by the U.S. Bureau of Labor Statistics and most frequently cited by the media. It is derived from the Current Population Survey conducted each month among some 60,000 households comprising of about 110,000 people. In January 2010 (when the Pew Research News IQ survey was taken) and in February 2010 the official rate was 9.7%. In determining that measure, the BLS counts as unemployed all persons who reported that they were currently without work but wanted a job and were either on temporary layoff or had actively looked for work in the preceding four weeks. The BLS definition of active job seeking includes — but is not limited to — contacting employers or employment agencies, asking friends or relatives, sending out resumes, answering or placing ads.

Critics object that this measure, which has been subject to only minor refinements since it was adopted in 1940, excludes “discouraged workers,” that is, people who would like to have a job but gave up looking in despair. Nor does it include people who have part-time jobs because that is all they could find but who would rather have full-time work. Although these criticisms have been made for many decades, they have gained added strength in recent months because other data — also collected by BLS — indicate that the number of people in these excluded categories of potential workers has continued to increase even as the official unemployment rate has leveled off.

In fact, beginning in the 1970s, the BLS has computed and published monthly, a range of unemployment indicators. As last modified, these are known as U-1 through U-6 with U-3 corresponding to the official unemployment rate. The most comprehensive of these (U-6) attempts to measure both the underemployed and discouraged workers. The BLS observes that for most of the period since 1994 all of these measures — despite the more subjective factors they rely on — have very closely tracked the official rate, which, given its long history, remains the most objective and reliable indicator of labor underutilization. (For more on the unemployment rate see “How the Government Measures Unemployment“)

Jodie T. Allen, Senior Editor, Pew Research Center