On Friday, the U.S. Bureau of Labor Statistics was due to release the monthly Employment Situation report, which is the benchmark for the headline unemployment rate, the the data has been delayed by the shutdown. Headline, or U-3, unemployment is a measure of how many members of the workforce — defined by the BLS as the set of Americans who are both eligible and willing to work — are actively seeking employment. In August, this was 11.3 million people, or 7.3 percent of the American labor force.
The headline unemployment rate can be misleading, and it often paints a rosier picture of labor market conditions than is called for. The headline rate doesn’t include marginally attached or discouraged workers — those who are underemployed and those who have given up on searching for a job. What’s more, the headline unemployment rate is sensitive to changes in the labor force participation rate, or the share of all adults who are willing and able to work, be they already employed or looking.
As of August, the labor force participation rate was 63.2 percent, down from 63.4 in July and substantially lower than its pre-crisis level of about 66 percent. This reduction in the labor force participation rate has helped reduce the headline unemployment rate without actually raising the overall level of employment or improving the health of the labor market.
Because the headline unemployment rate offers an incomplete picture of the labor market, observers often turn to alternative metrics. One popular alternative is the U-6 unemployment rate, which counts not just those job seekers included in the U-3 (headline) rate, but also those who are marginally attached to the workforce (underemployed) and people working part-time for economic reasons. This measure of unemployment fell from 14 percent in July to 13.7 percent in August, its lowest level since 2009.
Another metric is the payroll-to-population ratio, which is a measure of the percentage of the total adult population that is employed full time. Gallup has been tracking this metric since at least 2011. In an October 3 report, Gallup reported that its P2P fell from 43.7 percent in August to 43.5 percent in September and is down more than 1 full percentage point from this time last year.
Economists were expecting Friday’s report to show that the headline unemployment rate remained flat in September.