Broader Jobless Rate Hits 16.5%, Highest Level of 2011

From the Wall Street Journal | Oct 8, 2011

The U.S. jobless rate was flat at 9.1% in September, but the government’s broader measure of unemployment rose to 16.5%, the highest rate this year.

The comprehensive gauge of labor underutilization, known as the “U-6″ for its data classification by the Labor Department, accounts for people who have stopped looking for work or who can’t find full-time jobs.

The key to the rise in the broader unemployment rate was due to a 444,000 jump in the number of people employed part time but who would prefer full-time work. That number could reflect a rising number of workers who saw their hours cut back by concerned bosses or new part-time hires who would prefer full-time work.

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.

The 9.1% 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. 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, which rose by about 423,000 in September.

The broader rate increased despite a rise of 398,000 in the number of people who are employed, as the increase was canceled out by new entrants to labor force. Meanwhile, the number of unemployed people in the U.S. increased by just 25,000. But if the labor force increases continue to outpace the rises in the number employed, the headline 9.1% rate could move higher in the coming months.