By Phil Izzo
July 6, 2012
Wall Street Journal
The U.S. unemployment rate was unchanged at 8.2% in June but a broader measure rose to 14.9% as the ranks of the underemployed grew.
The jobless rate was unchanged even at the number of people who consider themselves employed jumped by 128,000.. The unemployment rate is calculated based on people who are without jobs, who are available to work and who have actively sought work in the prior four weeks, and that number rose just 29,000. The “actively looking for work” definition is fairly broad, including people who contacted an employer, employment agency, job center or friends; sent out resumes or filled out applications; or answered or placed ads, among other things. The rate is calculated by dividing that number by the total number of people in the labor force. When the unemployed return to the labor force, both numbers increase and the unemployment rate climbs.
In June, the reason the rate didn’t decline was that while the number of employed increased, so did the labor force — by a larger 189,000 people. That is a worrying sign in that the labor force is growing faster than job growth. If that continues, the unemployment rate could be headed higher.
Meanwhile, the broader unemployment rate, known as the “U-6″ for its data classification by the Labor Department, was up even higher in June. The U-6 figure includes everyone in the official rate plus “marginally attached workers” — those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that’s all they could find.
In June, the increase in the U-6 rate was driven by a jump in the number of part-time workers who would prefer a full-time job. The number of discouraged workers declined, which kept the overall rate from rising higher. That figure may be held down as thousands lose their unemployment benefits, and give up their tenuous hold on the labor force.