Welcome to the sometimes confusing world of measuring the job market. Most people would think this is an easy task. But — as you might expect, or I wouldn’t be writing this column — it’s not that simple. First, the government produces no fewer than six different unemployment rates each month. The rate typically reported by the media — called the “official” or “headline” rate — considers someone unemployed after passing three tests: The person does not have a job, wants a job, and has looked for a job in the past month — meaning the person mailed resumes, contacted employers, or had job interviews.
Someone who passes the first two tests but not the third is “officially” not considered unemployed. Economists call these folks “discouraged workers” because they have stopped looking for work. Also, people who are working part-time only because they can’t find full-time work — sometimes referred to as the “underemployed” — also are not part of the official unemployment rate.
How much difference exists between these different unemployment rates? A lot! For example, in August the official U.S. unemployment rate was 9.1 percent. If those without a job who had given up looking for work were included, the rate would have risen to 10.6 percent. Then, if those working part-time only because they can’t find full-time work were added, the jobless rate would have zoomed to 16.2 percent.
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