Question

Explain the measures of unemployment, U1-U6. (Macroeconomics)

Answer 1

Below 6 measures of Unemployment have been issued by BLS:

U1 refers to that part of the unemployed labor force which remains without a job for 15 weeks or more.

U2 refers to that part of the unemployed labor force that has lost jobs or has completed temporary work

U3 refers to actual number of people who are actively looking for a job. It is also known as official unemployment rate. In order to come under, U3 measure, people must be actively looking for job whiting the period of past four weeks. It excludes part-time workers or any discouraged worker.

U4: this includes all the people that come under U3 and the discouraged workers. Discouraged workers are basically a group that has stopped looking for a job. They are under the impression that current economic conditions would not fetch them a gig.

U5: It includes people that are included in U4 plus other groups such as Marginally Attached workers, Loosely attached workers and the voluntary people who are able to work and looking for it actively.

U6 includes all groups of U5 and all the part-time workers who wish to work for full time. So, it basically includes, Discouraged, Underemployed, Unemployed workers. U6 is a broader concept amongst all measures of unemployment.

U6 rate is therefore higher than all other measures of unemployment