For those who cling to the U3 unemployment charts, it might look as if some things have really improved. But it isn’t a complete picture.
I stick to the U6 report – considered to be the actual unemployment rate because it more inclusive.
The current U6 unemployment rate as of May 2021 is 10.20 percent.
The U-3 unemployment rate, or U3 rate, is the most commonly reported rate of unemployment in the United States and represents the number of people actively seeking a job.
The U-6 rate, or U6, includes discouraged, underemployed, and unemployed workers in the country. The U-6 unemployment rate includes a whole swath of unemployed people—namely, everyone not listed in the U-3 rate. That means the U-6 rate is much truer to a natural, non-technical understanding of what it means to be unemployed.
This rate accounts for anyone who has been seeking employment within the previous 12 months but have been unable to secure a job and has not searched for work in the past four weeks. It also includes anyone who has gone back to school, become disabled, and people who are underemployed or working part-time hours.
Many economists view the U-6 rate as the more meaningful rate because it covers a larger percentage of people who are unemployed.
Along with the economic growth rate and the inflation rate, the unemployment rate is one of the most widely reported and discussed economic indicators. It is regularly cited in the news because it provides a simple snapshot of the condition of the economy. Many assume that the unemployment rate is a straightforward measure of people who are out of work, but the reality is more complicated.
The adequately assess unemployment in the country, we need a complete picture. The U3 doesn’t provide this. And the government prefers the U3 rate, it sounds better that things really are.