Alternative Measures of Labor Underutilization for States, Third Quarter of 2014 through Second Quarter of 2015 Averages

Six alternative measures of labor underutilization have long been available on a monthly basis from the Current Population Survey (CPS) for the United States as a whole. They are published in the Bureau of Labor Statistics' monthly Employment Situation news release. (See table 15.) The official concept of unemployment (as measured in the CPS by U-3 in the U-1 to U-6 range of alternatives) includes all jobless persons who are available to take a job and have actively sought work in the past four weeks. This concept has been thoroughly reviewed and validated since the inception of the CPS in 1940. The other measures are provided to data users and analysts who want more narrowly (U-1 and U-2) or broadly (U-4 through U-6) defined measures.

BLS is committed to updating the alternative measures data for states on a 4-quarter moving-average basis. The use of 4-quarter averages increases the reliability of the CPS estimates, which are based on relatively small sample sizes at the state level, and eliminates seasonality. Due to the inclusion of lagged quarters, the state alternative measures may not fully reflect the current status of the labor market. The analysis that follows pertains to the averages from the third quarter of 2014 through the second quarter of 2015. Data are also available for prior time periods back to 2003.

The six state measures are based on the same definitions as those published for the United States:

  • U-1, persons unemployed 15 weeks or longer, as a percent of the civilian labor force;
  • U-2, job losers and persons who completed temporary jobs, as a percent of the civilian labor force;
  • U-3, total unemployed, as a percent of the civilian labor force (this is the definition used for the official unemployment rate);
  • U-4, total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers;
  • U-5, total unemployed, plus discouraged workers, plus all other marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers; and
  • U-6, total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

Definitions for the economic characteristics underlying the three broader measures of labor underutilization are worth mentioning here. Discouraged workers (U-4, U-5, and U-6 measures) are persons who are not in the labor force, want and are available for work, and had looked for a job sometime in the prior 12 months. They are not counted as unemployed because they had not searched for work in the prior 4 weeks, for the specific reason that they believed no jobs were available for them. The marginally attached (U-5 and U-6 measures) are a group that includes discouraged workers. The criteria for the marginally attached are the same as for discouraged workers, with the exception that any reason could have been cited for the lack of job search in the prior 4 weeks. Persons employed part time for economic reasons (U-6 measure) are those working less than 35 hours per week who want to work full time, are available to do so, and gave an economic reason (their hours had been cut back or they were unable to find a full-time job) for working part time. These individuals are sometimes referred to as involuntary part-time workers.

Generally, all six measures of labor underutilization move together over time, including across business cycles. Similarly, states that have low unemployment rates tend to have low values for the other five measures; the reverse is true for states with high unemployment rates. Note that, in the table and in the comparisons below, the unemployment rates (U-3) that are shown are derived directly from the CPS, because this is the only source of data for the various components of the other five measures. As a result, these U-3 measures may differ from the official state unemployment rates for the same period. The official rates are developed from statistical models that greatly improve the reliability of the topside labor force and unemployment estimates. Those models, developed by the Local Area Unemployment Statistics (LAUS) program, incorporate CPS estimates, as well as input data from other sources. The model-based estimates are accessible through the LAUS program homepage.

For additional information on state estimates derived directly from the CPS, see notes on subnational CPS data.

Alternative measures of labor underutilization by state, third quarter of 2014 through second quarter of 2015 averages (percent)
State Measure
U-1 U-2 U-3 U-4 U-5 U-6

United States

2.6 2.8 5.7 6.1 7.0 11.3

Alabama

3.0 2.9 6.3 6.9 7.9 11.8

Alaska

2.6 3.6 7.0 7.5 8.7 12.1

Arizona

2.7 2.7 6.4 7.0 7.9 13.8

Arkansas

2.1 2.7 5.8 6.0 6.8 10.1

California

3.2 3.3 6.8 7.2 8.2 14.0

Colorado

1.8 2.1 4.3 4.5 4.9 8.8

Connecticut

3.2 3.7 6.0 6.6 7.4 12.1

Delaware

2.7 3.1 5.3 5.8 6.4 10.4

District of Columbia

4.8 3.3 7.6 7.9 8.7 11.3

Florida

3.0 2.9 5.8 6.4 7.1 12.3

Georgia

3.6 2.7 6.5 7.1 8.1 12.5

Hawaii

1.6 1.8 4.1 4.5 5.5 10.1

Idaho

1.3 2.1 4.2 4.4 5.0 9.2

Illinois

3.3 3.0 6.1 6.6 7.5 11.5

Indiana

2.1 2.7 5.5 5.9 6.6 10.3

Iowa

1.2 2.2 4.0 4.1 4.7 8.0

Kansas

1.8 2.2 4.5 4.7 5.4 8.7

Kentucky

2.2 2.7 5.4 5.7 6.7 10.5

Louisiana

2.7 3.3 6.9 7.5 8.4 11.9

Maine

2.1 2.9 5.3 5.7 6.7 11.1

Maryland

3.0 2.3 5.5 5.9 6.8 10.0

Massachusetts

2.7 3.0 5.5 5.7 6.6 10.4

Michigan

2.8 3.2 6.2 6.6 7.6 12.6

Minnesota

1.4 2.1 3.8 4.1 4.8 8.0

Mississippi

3.5 3.3 6.9 7.6 8.6 12.8

Missouri

2.1 3.3 5.7 6.0 6.7 10.7

Montana

1.4 2.6 4.3 4.5 5.3 9.2

Nebraska

0.8 1.2 2.9 3.0 3.7 6.5

Nevada

3.5 3.7 7.3 7.8 8.8 15.2

New Hampshire

1.6 2.1 3.9 4.1 4.7 8.9

New Jersey

3.7 3.9 6.4 6.9 7.7 11.9

New Mexico

3.1 2.7 6.6 7.2 8.5 12.4

New York

2.9 2.9 5.7 6.3 7.2 11.4

North Carolina

2.8 2.5 5.9 6.5 7.3 11.6

North Dakota

0.8 1.3 2.9 3.0 3.7 5.5

Ohio

2.1 2.3 5.2 5.7 6.5 10.7

Oklahoma

1.4 1.9 4.3 4.8 5.5 8.2

Oregon

2.5 3.0 6.2 6.6 7.4 12.8

Pennsylvania

2.6 2.9 5.5 5.9 6.9 11.4

Rhode Island

3.6 3.8 6.7 7.0 8.0 12.4

South Carolina

3.3 2.9 6.8 7.4 8.4 12.8

South Dakota

1.3 1.4 3.6 3.9 4.6 6.7

Tennessee

2.6 3.1 6.3 6.9 7.7 11.9

Texas

1.7 2.0 4.5 4.9 5.5 8.8

Utah

0.9 1.7 3.6 3.9 4.5 7.9

Vermont

1.4 2.1 4.0 4.2 5.0 8.7

Virginia

2.3 2.1 5.0 5.2 6.1 10.0

Washington

2.2 3.3 5.9 6.2 7.2 11.7

West Virginia

3.2 3.2 6.9 7.4 8.5 13.0

Wisconsin

2.0 2.6 4.9 5.2 5.8 8.7

Wyoming

1.0 1.9 4.1 4.2 4.8 7.7

                              Substate areas

Los Angeles County

4.1 3.7 7.7 8.1 8.9 16.0

New York City

3.5 3.1 6.3 6.9 7.9 12.0

For the 4-quarter average period ending in June 2015, Nebraska and North Dakota had the lowest rates for each of the six alternative measures of labor underutilization. Nebraska had the lowest rate for U-2, while North Dakota had the lowest rate for U-6. The two states had the same rates for the remaining measures. Thirteen other states had rates statistically significantly lower than the U.S. for all six measures. California, Nevada, and Rhode Island had rates measurably higher than the U.S. for all six measures.

The U-4 rate includes discouraged workers; thus, the difference between U-3 and U-4 reflects the degree of would-be job-seeker discouragement. At the national level, the difference between U-3 and U-4 was +0.4 percentage point through the second quarter of 2015. Three states had statistically significant differences between these two measures: Florida and New York, +0.6 percentage point each, and California, +0.4 point. The remaining states and the District of Columbia had gaps that were not measurably different, though some had gaps that were at least as large numerically as the significant ones.

The U-5 rate includes all persons who are marginally attached to the labor force, and U-6 adds those who are involuntary part-time workers. Therefore, the larger the difference between U-5 and U-6, the higher the incidence of this form of "underemployment." For the four quarters ending in June 2015, all states and the District of Columbia had significant differences between their U-5 and U-6 rates. Nevada had the largest gap, +6.4 percentage points. North Dakota had the smallest gap, +1.8 percentage points, indicating a comparatively low degree of underemployment. At the national level, the difference between U-5 and U-6 was +4.3 percentage points.

Relative to the four quarters ending in June 2014, 19 states experienced statistically significant decreases in all six measures of labor underutilization. For each measure, at least 25 states showed significant improvement over the year. Louisiana was the only state with a significant over-the-year rate increase in any of the measures.

Many states with extreme measures, either low or high, maintained their general place in the rankings of alternative measures over the year. Minnesota, Nebraska, North Dakota, South Dakota, Utah, Vermont, and Wyoming had rates among the 10 lowest for each measure in the four quarters ending June 2014 and those ending June 2015. Similarly, California and Nevada had rates among the 10 highest for each measure in both periods.

The alternative measures for states are analyzed on a 4-quarter average basis in order to increase the reliability of the CPS estimates, which are based on relatively small sample sizes at the state level, and to eliminate seasonality. Due to the small state sample sizes, neither monthly nor quarterly statewide data from the CPS satisfy BLS publication standards. Due to the inclusion of lagged quarters, the state alternative measures may not fully reflect the current status of the labor market.

The next issuance of the alternative measures of labor underutilization for states, covering the four quarters ending in September 2015, is scheduled for Friday, October 23, 2015.

 

Last Modified Date: July 24, 2015