Alternative Measures of Labor Underutilization for States, Fourth Quarter of 2013 through Third Quarter of 2014 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 fourth quarter of 2013 through the third quarter of 2014. 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 high unemployment rates tend to have high values for the other five measures; the reverse is true for states with low 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 top-side 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, fourth quarter of 2013 through third quarter of 2014 averages (percent)
State Measure
U-1 U-2 U-3 U-4 U-5 U-6

United States

3.3 3.3 6.5 6.9 7.8 12.5

Alabama

4.0 3.8 7.2 7.8 8.9 12.8

Alaska

2.5 3.8 7.2 7.5 8.4 11.6

Arizona

3.3 3.4 7.1 7.7 8.7 15.1

Arkansas

2.3 3.2 6.6 6.9 7.6 11.2

California

4.1 4.2 7.8 8.4 9.4 15.8

Colorado

2.6 2.6 5.4 5.6 6.3 10.1

Connecticut

3.7 3.5 6.7 7.3 8.1 12.8

Delaware

3.0 3.2 6.1 6.7 7.5 12.0

District of Columbia

5.2 3.8 8.1 8.5 9.5 12.6

Florida

3.8 3.5 6.5 7.1 7.8 13.4

Georgia

4.3 3.4 7.6 8.2 9.1 13.6

Hawaii

2.2 1.9 4.7 5.2 6.0 10.8

Idaho

1.7 2.2 5.0 5.1 6.0 10.5

Illinois

4.3 4.3 7.7 8.1 8.9 13.7

Indiana

2.7 3.3 6.1 6.6 7.4 11.5

Iowa

1.7 2.6 4.7 4.9 5.3 8.8

Kansas

1.7 2.5 4.7 4.9 5.8 9.4

Kentucky

3.4 3.7 7.2 7.5 8.6 12.9

Louisiana

2.7 2.6 5.9 6.3 7.2 11.0

Maine

2.5 3.2 5.9 6.2 7.1 12.4

Maryland

3.2 3.1 6.0 6.4 7.4 11.1

Massachusetts

3.2 3.4 6.3 6.7 7.6 12.3

Michigan

3.9 3.9 7.8 8.3 9.2 14.2

Minnesota

1.8 2.4 4.3 4.6 5.3 9.2

Mississippi

4.2 3.7 7.8 8.4 9.3 13.5

Missouri

3.0 3.7 6.5 6.9 7.6 11.7

Montana

1.8 2.7 5.1 5.3 5.9 10.7

Nebraska

1.2 1.7 3.5 3.7 4.2 7.1

Nevada

4.6 4.4 8.3 9.1 10.0 15.9

New Hampshire

2.3 2.6 4.6 4.8 5.6 10.2

New Jersey

4.1 4.3 6.9 7.3 8.2 12.7

New Mexico

4.2 2.9 7.4 7.9 9.4 13.7

New York

4.0 3.8 6.7 7.2 8.2 12.9

North Carolina

3.5 3.2 6.5 7.2 7.9 12.6

North Dakota

0.7 1.4 2.8 3.0 3.4 5.4

Ohio

3.2 3.1 6.2 6.6 7.4 11.8

Oklahoma

1.9 2.2 5.0 5.5 6.4 9.3

Oregon

3.2 3.7 7.2 7.5 8.5 14.8

Pennsylvania

3.2 3.4 6.2 6.8 7.8 12.2

Rhode Island

4.7 4.5 8.4 8.7 9.6 14.4

South Carolina

3.0 2.8 6.3 6.9 7.9 12.2

South Dakota

1.1 1.6 3.6 3.7 4.3 6.5

Tennessee

3.0 3.4 6.8 7.3 8.1 13.4

Texas

2.2 2.4 5.4 5.7 6.4 10.4

Utah

1.2 1.8 3.9 4.1 4.7 8.2

Vermont

1.6 2.0 4.1 4.4 5.0 8.7

Virginia

2.5 2.6 5.4 5.8 6.6 10.7

Washington

2.8 3.1 6.1 6.5 7.4 12.4

West Virginia

3.3 3.4 6.7 7.2 8.1 12.6

Wisconsin

2.5 3.4 5.9 6.1 7.1 10.9

Wyoming

1.4 2.2 4.5 4.7 5.2 7.7

                              Substate areas

Los Angeles County

4.8 4.3 8.4 9.0 9.9 17.3

New York City

5.0 4.2 7.7 8.3 9.3 13.7

For the 4-quarter average period ending in September 2014, Nevada and Rhode Island had the highest rates for most of the alternative measures of labor underutilization. The District of Columbia had the highest U-1, at 5.2 percent, while Rhode Island had the highest U-2 and U-3 rates, at 4.5 percent and 8.4 percent, respectively. Nevada had the highest rates for U-4 (9.1 percent), U-5 (10.0 percent), and U-6 (15.9 percent).

North Dakota continued to have the lowest rates for all six measures, ranging from a U-1 of 0.7 percent to a U-6 of 5.4 percent, with a U-3 rate of 2.8 percent. Nebraska and South Dakota had the next-lowest rates for all measures, including U-3 rates of 3.5 percent and 3.6 percent, respectively.

Since the U-4 rate includes discouraged workers, the difference between U-3 and U-4 reflects the degree of would-be job-seeker discouragement. At the national level, the gap between U-3 and U-4 over this time period was +0.4 percentage point. Nevada had the largest gap between its U-3 and U-4 rates, +0.8 percentage point, while North Carolina had the second-largest gap, +0.7 point. Idaho and South Dakota had the smallest gaps between their U-3 and U-4 rates, +0.1 percentage point each, indicating relatively low incidences of discouragement.

In addition to the marginally attached, who are included in U-5, involuntary part-time workers are included in U-6. The larger the difference between U-5 and U-6, the higher the incidence of this form of "underemployment." Arizona and California had the largest gaps between their U-5 and U-6 rates, +6.4 percentage points each, followed by Oregon, +6.3 points. North Dakota had the smallest difference between its U-5 and U-6 measures, +2.0 percentage points, indicating a comparatively low degree of underemployment.

Overall, states had more declines than increases in the alternative measures relative to the four quarters ending in June 2014, reflecting the continuing improvement in the national labor market. The measure with the most decreases was U-6, where 44 states and the District of Columbia had improvement. The measure with the fewest decreases was U-3, where 35 states had declines. Altogether, 27 states had decreases in all six measures.

For each measure, between four states (U-2) and ten states (U-5) had increases from the four quarters ending in June 2014. Seven states had increases in U-4, while six states each had increases in U-1 and U-3 and five states had increases in U-6. No state had increases in all six measures relative to the previous period.

In 43 states and the District of Columbia, all six measures decreased relative to the four quarters ending in September 2013. For each measure, between 45 states and the District of Columbia (U-2) and 48 states and the District of Columbia (U-1) showed improvements. No state had an increase in all six measures over the year

Many states with relatively high or low rates maintained their general place in the rankings of alternative measures over the year. California, Illinois, Nevada, and Rhode Island had rates among the 10 highest for each measure in both 4-quarter average periods. Similarly, Nebraska, North Dakota, South Dakota, Utah, Vermont, and Wyoming had rates among the 10 lowest for each measure in both periods. Except for Utah, these same states have been among the 10 lowest-rate for each measure since 2009.

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 inclusion of lagged quarters, the state alternative measures may not fully reflect the current status of the labor market.

Note that some state rankings cited above include ties. Data are calculated from quarterly tables in which the components of each measure are rounded to the nearest hundred. As a result, these measures contain slightly more rounding error than that found in typical CPS annual average tabulations (in which rates are calculated based on unrounded data). Due to small state sample sizes, neither monthly nor quarterly state data from the CPS satisfy BLS publication standards.

The next issuance of the alternative measures of labor underutilization for states, pertaining to the 2014 annual averages, is tentatively scheduled for Friday, January 30, 2015.

 

Last Modified Date: October 24, 2014