Alternative Measures of Labor Underutilization for States, 2009 Annual 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 made these alternative measures for states available beginning with annual averages for 2008. Annual averages for 2005, 2006, and 2007 are available as well. BLS is committed to updating these data on a 4-quarter moving-average basis. The analysis that follows pertains to the averages from the first through fourth quarters of 2009. For the purpose of this analysis, the data will be referred to as "4-quarter averages," though it should be noted that, in this instance, the 4-quarter averages are equal to the annual averages for 2009. Data for the second quarter of 2008 through first quarter of 2009, third quarter of 2008 through second quarter of 2009, and fourth quarter of 2008 through third quarter of 2009 are also available.

The six state measures are based on the same definitions as those published for the U.S.:

• 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.

Generally, all six measures 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. As a result, these U-3 measures may differ from the official state unemployment rates for the same period. The latter are estimates 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. The official model-based annual averages for 2009 will be released on February 26, 2010.

Alternative measures of labor underutilization by state, 2009 annual averages (percent)

State	Measure
	U-1	U-2	U-3	U-4	U-5	U-6
United States	4.7	5.9	9.3	9.7	10.5	16.2
Alabama	5.9	6.7	11.2	11.6	12.6	17.1
Alaska	2.9	4.2	7.9	8.3	9.4	13.8
Arizona	5.1	6.5	10.0	10.5	11.3	18.1
Arkansas	3.2	4.7	7.8	8.2	9.0	14.6
California	6.1	7.3	11.3	11.8	13.0	21.1
Colorado	3.3	4.5	7.4	7.6	8.3	13.7
Connecticut	4.3	5.2	8.1	8.6	9.4	14.4
Delaware	4.3	5.2	8.5	9.1	9.9	14.5
District of Columbia	5.2	5.3	9.5	10.0	11.1	14.2
Florida	6.0	6.9	10.4	11.1	11.9	18.4
Georgia	5.4	6.5	9.8	10.3	11.1	16.9
Hawaii	3.5	4.3	7.4	8.0	9.1	15.5
Idaho	3.7	5.3	8.5	8.8	9.6	16.5
Illinois	5.4	6.8	10.0	10.4	11.2	17.0
Indiana	4.9	7.0	10.0	10.4	11.2	17.6
Iowa	2.5	3.9	6.3	6.5	7.1	11.7
Kansas	2.9	4.3	6.8	7.0	7.6	11.5
Kentucky	5.1	6.5	10.6	11.1	11.9	17.5
Louisiana	2.6	4.1	7.1	7.6	8.2	10.6
Maine	4.0	4.9	8.1	8.5	9.5	14.7
Maryland	3.6	4.3	7.1	7.4	8.2	12.2
Massachusetts	4.2	6.1	8.4	8.7	9.4	14.5
Michigan	7.6	9.4	13.3	14.1	15.0	21.5
Minnesota	3.5	5.0	7.8	8.1	8.9	14.2
Mississippi	4.6	5.1	9.2	10.2	11.2	16.2
Missouri	4.5	5.6	9.4	9.8	10.4	15.6
Montana	2.9	4.9	7.1	7.4	7.9	13.5
Nebraska	1.9	2.6	4.6	4.7	5.4	9.0
Nevada	5.9	8.4	11.3	11.9	12.4	19.2
New Hampshire	3.2	4.5	6.4	6.8	7.6	12.5
New Jersey	5.1	6.1	9.1	9.5	10.4	15.2
New Mexico	3.3	5.0	7.6	8.0	8.7	14.0
New York	4.5	5.1	8.3	8.9	9.9	14.3
North Carolina	6.0	6.5	10.4	10.9	11.6	17.7
North Dakota	1.2	2.3	4.2	4.4	4.9	8.0
Ohio	5.1	6.6	10.3	10.7	11.7	17.2
Oklahoma	2.6	3.4	6.2	6.5	7.2	10.5
Oregon	5.4	7.9	11.5	11.8	12.7	20.7
Pennsylvania	3.6	4.9	7.9	8.2	9.1	13.8
Rhode Island	6.2	7.1	11.2	11.7	12.5	19.1
South Carolina	6.8	8.0	11.8	12.4	13.4	19.6
South Dakota	1.7	3.0	5.0	5.3	5.7	9.9
Tennessee	5.7	7.1	10.8	11.2	12.0	18.6
Texas	3.2	4.5	7.5	7.9	8.5	13.7
Utah	2.9	4.9	7.3	7.7	8.3	12.9
Vermont	2.9	4.1	6.5	6.8	7.5	11.8
Virginia	3.1	3.7	6.6	7.0	7.5	12.1
Washington	4.1	5.4	9.0	9.4	10.2	16.2
West Virginia	3.7	5.1	8.0	8.6	9.3	14.2
Wisconsin	4.1	5.8	8.4	8.7	9.6	14.6
Wyoming	2.2	4.3	6.5	6.8	7.3	11.3

Michigan again registered the highest 4-quarter average rates for all six measures, including a U-3 of 13.3 percent, a U-1 of 7.6 percent, and a U-6 of 21.5 percent. The states with the next highest U-3 values were South Carolina, 11.8 percent; Oregon, 11.5 percent; and California and Nevada, 11.3 percent each. With the exceptions of Nevada's U-1 and U-5 and Oregon's U-1, these four states also had the second-through-fifth highest rates for each of the other alternative measures, though not in the same rank order.

North Dakota continued to record the lowest rates for all six measures, including a U-3 of 4.2 percent, a U-1 of 1.2 percent, and a U-6 of 8.0 percent. Only one other state had a U-3 value below 5.0 percent over the latest 4-quarter average period: Nebraska, 4.6 percent. South Dakota, Oklahoma, and Iowa followed with U-3 rates of 5.0, 6.2, and 6.3 percent, respectively. Except for Iowa's U-2 and U-6 and Oklahoma's U-1, these four states also reported the second-through-fifth lowest alternative measures in the remaining categories, though not in the same rank order.

There are some interesting exceptions to the general pattern of similar rankings across all six measures. The District of Columbia was the only jurisdiction with a U-1 nearly equal to its U-2 (5.2 and 5.3 percent, respectively). While the District's U-1 ranked 13^th highest, its U-2 was only the 22^nd highest. The long-term unemployed constitute a relatively large share of jobless persons there, leading to a relatively high U-1. Categorized by reason for unemployment, the unemployed in the District are more likely to be labor force entrants and less likely to be job losers than the unemployed in most states, leading to a relatively low U-2. At the other extreme, Nevada and Oregon each had a gap of 2.5 percentage points between their U-1 and U-2 rates.

Mississippi had the largest gap between its U-3 and U-4 rates, +1.0 percentage point. (This was more than twice the gap of 0.4 percentage point nationally over the 4-quarter average period.) The difference between U-3 and U-4 is that the latter includes discouraged workers. Thus, the large gap for Mississippi is a reflection of the relatively high degree of job-seeker discouragement there. In contrast, Nebraska had a 0.1-percentage point gap between its U-3 and U-4 rates, indicating a relatively low incidence of discouragement.

In addition to the members of 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 “underemployment.” California and Oregon posted the largest gaps between their U-5 and U-6 rates, +8.1 and +8.0 percentage points, respectively. These two states also had among the five highest values of U-3 over the 4-quarter average period. Louisiana registered the smallest difference between its U-5 and U-6, +2.4 percentage points, indicating a comparatively low degree of underemployment.

The largest spread between U-1 and U-6 among states was posted by Oregon, +15.3 percentage points. California and Michigan followed with 15.0- and 13.9-percentage point spreads, respectively. North Dakota had the smallest range across its alternative measures, +6.8 percentage points. The second smallest range was in Nebraska, +7.1 percentage points. In general, states with lower U-3 rates had narrower ranges between their measures.

All six measures for all states increased relative to the prior 4-quarter average period, with two exceptions: Louisiana’s U-1 (-0.1 percentage point) and Montana’s U-2 (unchanged). Alabama experienced the largest increase among states in its U-3, +1.3 percentage points. South Carolina and Wyoming followed, with increases of 1.2 percentage points each. Along with Nevada and Ohio, which had U-3 increases of 1.1 percentage points each, these states also had the largest increases for the majority of the remaining alternative measures.

Relative to the annual averages for 2008, all six measures increased in all states. Alabama experienced the largest increase over the year in its U-3 rate, +5.6 percentage points, followed by Nevada, +5.2 points; Oregon and South Carolina, +5.1 points each; and Michigan, +5.0 points. With a handful of exceptions (Alabama’s U-6, Michigan’s U-6, and Oregon’s U-1), the largest increases for the other alternative measures were also reported by these states. North Dakota recorded the smallest over-the-year increase in its U-3 rate, +1.0 percentage point, and the smallest or second smallest over-the-year increases for each of the other five measures.

Many states with extreme measures, either high or low, maintained their general place in the rankings of alternative measures from 2008 to 2009. California, Michigan, Rhode Island, and South Carolina had rates among the 10 highest of each measure for both years. Similarly, Iowa, Nebraska, North Dakota, South Dakota, and Wyoming had rates among the 10 lowest for each measure in both years.

Though these data pertain to the 4-quarter average period ending in December 2009, the deterioration of the labor market during the first half of 2009 was so rapid and pronounced that many of these measures still understate the current degree of labor market underutilization. For example, the U.S. unemployment rate in December 2009 was 10.0 percent (seasonally adjusted), well above the 9.3-percent average for the 4-quarter period. Despite the lag, 4-quarter averages are used to increase the reliability of the CPS estimates, which are based on relatively small sample sizes at the state level, and to eliminate seasonality.

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

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.

 

Last Modified Date: February 5, 2010