Searching For The Real Unemployment Rate, Not Just The Official One

Forbes

14-07-2025

Signage at the New York Public Library's annual Bronx Job Fair & Expo at the Bronx Library Center in ... More the Bronx borough of New York, US, on Friday, Sept. 6, 2024. US hiring fell short of forecasts in August after July's payroll number was revised down, a development likely to fuel ongoing debate over how much the Federal Reserve should cut interest rates. Photographer: Yuki Iwamura/Bloomberg
Last month we looked at 10 college degrees that see high unemployment, and the problem isn't basketweaving. A number of affected majors are so-called STEM, or science, technology, engineering, and mathematics, degrees that are supposed to hold the key to higher earnings and a place in the top economic quarter. Physics, computer engineering, computer science, chemistry, and information systems and management, all have proven themselves capable of offering a higher than average chance of not having work.
Big tech companies have been laying off thousands, artificial intelligence is going to replace many workers. (It's already happening.) It will likely get worse, as recent figures have suggested. Those depending on their education may be taken by surprise; June job losses were concentrated in white collar industries.
Non-white collar workers aren't necessarily at an advantage either. Major industries, including mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; retail trade; transportation and warehousing; information; financial activities; professional and business services; leisure and hospitality; and other services, had flat job growth.
However, there's an even more worrisome turn.
At least a current focus on unemployment has had the happy consolation that unemployment rates are historically low. But are they as low as you might think? Maybe not. There are multiple unemployment numbers that the government publishes. The official one is called U-3. In June it was 4.1%.
There are six different ones, and the definitions of the others help explain what might be missing in U-3.
And then there are the descriptions of the additional terms, which may not be obvious.
The U-3 measure clearly doesn't incorporate all the people who might want work but lack all or enough. As the categories run up, so does the unemployment rate. The U-4 in June was 4.5%; the U-5, 5.1%; and the U-6 — the most inclusive — 7.7%.
Also, those numbers are seasonally adjusted, meaning officials modify the numbers in an attempt to remove 'predictable seasonal patterns' to see how unemployment changes from month to month, as the U.S. Bureau of Labor Statistics puts it.
However, it means the official numbers aren't the actual ones for any given month. The non-seasonally adjusted numbers for June are 4.4% for U-3, 4.7% for U-4, 5.4% for U-5, and 8.1% for U-6.
It's another way that the government doesn't admit to how challenging things can be, like how median household incomes have lagged so far behind the cost of living for the last 40 years.