Alternative Measures of Labor Underutilization for States, Second Quarter of 2012 through First Quarter of 2013 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 second quarter of 2012 through the first quarter of 2013. 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, second quarter of 2012 through first quarter of 2013 averages (percent)
State Measure
U-1 U-2 U-3 U-4 U-5 U-6

United States

4.4 4.3 7.9 8.4 9.4 14.5

Alabama

4.5 4.3 8.1 8.7 9.7 13.5

Alaska

3.1 3.9 7.0 7.6 8.4 12.7

Arizona

3.8 3.9 8.0 8.6 9.7 15.6

Arkansas

3.4 3.8 7.7 8.2 9.3 13.4

California

5.8 5.5 9.9 10.5 11.6 18.8

Colorado

3.8 4.1 7.7 8.0 8.9 14.1

Connecticut

5.2 5.2 8.4 8.9 9.8 14.8

Delaware

4.4 4.3 7.6 8.0 8.9 14.1

District of Columbia

5.8 4.4 8.6 9.2 10.4 13.8

Florida

5.1 4.7 8.2 9.0 9.8 15.5

Georgia

5.1 4.1 8.9 9.7 10.5 15.6

Hawaii

3.1 2.8 5.7 6.1 7.1 12.0

Idaho

3.4 3.1 6.7 7.0 7.8 13.5

Illinois

5.3 5.0 9.0 9.5 10.2 16.1

Indiana

4.0 4.7 8.5 8.9 9.6 14.3

Iowa

2.1 2.5 5.1 5.3 6.1 9.8

Kansas

2.5 2.6 5.5 5.9 6.8 10.6

Kentucky

3.9 4.1 7.8 8.2 9.0 13.8

Louisiana

3.7 3.1 7.1 7.6 8.7 12.2

Maine

3.7 4.0 7.4 7.7 9.0 14.5

Maryland

3.8 3.8 6.8 7.4 8.3 12.0

Massachusetts

3.6 3.9 6.6 7.2 8.0 12.8

Michigan

5.0 4.8 8.9 9.5 10.8 16.2

Minnesota

2.5 3.0 5.5 5.8 6.6 11.4

Mississippi

5.2 4.7 9.3 9.9 11.4 15.5

Missouri

3.5 4.0 6.8 7.1 7.8 12.2

Montana

2.4 3.0 6.0 6.3 6.9 13.3

Nebraska

1.7 1.8 4.0 4.2 4.7 8.6

Nevada

6.3 6.2 10.8 11.7 13.0 19.6

New Hampshire

2.9 3.2 5.8 6.1 6.8 11.5

New Jersey

5.8 5.5 9.3 10.0 10.8 15.7

New Mexico

3.9 3.6 7.1 7.5 8.7 13.6

New York

5.2 4.9 8.5 9.1 10.1 14.7

North Carolina

5.6 4.9 9.2 9.7 10.8 16.2

North Dakota

1.1 1.5 3.2 3.4 3.9 6.2

Ohio

3.7 3.7 7.2 7.7 8.6 13.5

Oklahoma

2.0 2.8 5.2 5.5 6.5 9.8

Oregon

4.4 4.9 8.9 9.2 10.2 17.2

Pennsylvania

4.4 4.8 7.9 8.4 9.4 13.9

Rhode Island

5.9 5.9 9.8 10.2 11.0 16.7

South Carolina

5.1 4.8 9.1 9.9 11.1 15.6

South Dakota

1.4 1.9 4.4 4.7 5.2 8.1

Tennessee

4.2 4.2 7.9 8.4 9.0 13.9

Texas

3.1 3.3 6.6 6.9 7.6 11.6

Utah

2.2 2.9 5.3 5.7 6.4 10.9

Vermont

2.0 2.5 4.8 5.1 6.0 10.5

Virginia

3.0 2.6 5.7 6.2 7.0 11.6

Washington

4.0 4.6 8.0 8.4 9.7 16.4

West Virginia

4.2 4.1 7.5 7.9 8.6 12.9

Wisconsin

3.5 4.1 7.2 7.6 8.6 13.3

Wyoming

2.0 2.4 5.3 5.6 6.2 9.5

                              Substate areas

Los Angeles County

6.1 5.7 10.5 11.1 12.2 20.5

New York City

6.2 5.3 9.1 10.0 11.1 15.5

For the 4-quarter average period ending in March 2013, Nevada had the highest rates for all six alternative measures of labor underutilization. Nevada’s rates ranged from a U-2 of 6.2 percent to a U-6 of 19.6 percent, including a CPS-based unemployment rate, U-3, of 10.8 percent. The next highest U-3 rates were in California and Rhode Island, 9.9 and 9.8 percent, respectively. After Nevada, these two states ranked among the highest five rates for each of the other alternative measures.

North Dakota continued to have the lowest rates for all six measures, ranging from a U-1 of 1.1 percent to a U-6 of 6.2 percent, including a U-3 of 3.2 percent. Nebraska and South Dakota had the next lowest U-3 rates, 4.0 and 4.4 percent, respectively, and also ranked among the lowest three states for the remaining measures. Ten other states had U-3 values of less than 6.0 percent over the latest 4-quarter period: Vermont, 4.8 percent; Iowa, 5.1 percent; Oklahoma, 5.2 percent; Utah and Wyoming, 5.3 percent each; Kansas and Minnesota, 5.5 percent each; Hawaii and Virginia, 5.7 percent each; and New Hampshire, 5.8 percent.

Nevada had the largest gap between its U-3 and U-4 rates, +0.9 percentage point. The U-4 rate includes discouraged workers, so 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 +0.5 percentage point. Iowa, Nebraska, and North Dakota had the smallest gaps between their U-3 and U-4 rates, +0.2 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 the U-5 and U-6 measures, the higher the incidence of this form of "underemployment." California posted the largest gap between its U-5 and U-6 rates, +7.2 percentage points, followed by Oregon, +7.0 points. North Dakota registered the smallest difference between its U-5 and U-6 rates, +2.3 percentage points, indicating a comparatively low degree of involuntary part-time employment.

Overall, states experienced more declines than increases in the alternative measures relative to the prior 4-quarter average period, reflecting the continuing improvement in the national labor market. The measure with the largest number of decreases was U-2, with 35 states showing declines. Twenty-nine states and the District of Columbia had decreases in U-3, U-4, and U-5, the measures with the fewest numbers of declines. The largest decrease in U-1 was in Utah, -0.5 percentage point. Rhode Island had the largest decreases among the states in the other five measures: U-2, U-3, and U-4 (-0.7 percentage point each); U-5 (-0.8 point); and U-6 (-0.9 point). Altogether, 20 states experienced decreases in all six measures.

For each measure, between 7 and 16 states had increases from the previous period, with the largest number of increases occurring in the U-5 measure. The largest increases for each measure occurred in: U-1, West Virginia (+0.3 percentage point); U-2, Mississippi (+0.3 point); U-3, Delaware and Mississippi (+0.4 point each); U-4, Mississippi (+0.5 point); U-5, Arkansas (+0.4 point); and U-6, Tennessee (+0.6 point). Only two states, Indiana and Mississippi, had increases in all six measures relative to the previous period.

In 36 states and the District of Columbia, all six measures decreased relative to the same period a year earlier. For each measure, between 42 and 46 states and the District of Columbia showed improvements over the year. Nevada experienced the largest declines in five of the six measures: U-1 (-2.0 percentage points), U-2 (-1.8 points), U-3 (-1.9 points), U-4 (-2.0 points), and U-5 (-2.2 points). The District of Columbia was also tied with Nevada for the largest over-the-year decline in U-3 (-1.9 percentage points). Hawaii and Idaho had the largest decreases in U-6 (-2.8 percentage points each). Delaware and Pennsylvania were the only states not to experience a decline in any of the six alternative measures of labor underutilitization over the year.

Note: 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, covering the four quarters ending in June 2013, is tentatively scheduled for Friday, July 26, 2013.

 

Last Modified Date: April 26, 2013