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The June Jobs Report from the Bureau of Labor Statistics is out today. There are 850,000 new jobs, but the unemployment rate went up by 0.1%. What is going on? It turns out that unemployment rates can be complicated. With the help of economist Nick Bunker, we take a deeper look at this world.
The Bureau of Labor Statistics calculates six types of unemployment numbers, from U-1 to U-6. U-3 is the most well-known number, the one we see on the news. Nick says U-3 is not the best measure of unemployment, especially during the pandemic. Millions of people went on temporary layoff, but counted as unemployed in U-3. On the other hand, discouraged workers (U-4) and people marginally attached to the workforce (U-5) are not counted in U-3, such as restaurant cooks and stay-at-home lawyer dads.
To more accurately reflect the jobs market, Nick Bunker and his team created a new indicator, the U-Blend or core unemployment rate. It accounts for those on temporary layoff and those who want to work but cannot due to certain reasons. In comparison to U-3, the U-Blend rate tells a very different story from the BLS data.