Alternative Measures of Labor Underutilization for States, Fourth Quarter of 2008 through Third Quarter of 2009 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 12.) The official measure of unemployment (referred to as U-3 in the U-1 to U-6 range of alternative measures) includes all jobless persons who are available to take a job and have actively sought work in the past four weeks. This measure 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 4-quarter averages from the fourth quarter of 2008 through the third quarter of 2009. Data for the second quarter of 2008 through first quarter of 2009 period and the third quarter of 2008 through second quarter of 2009 period 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 official 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. As a result, these U-3 measures may differ from the official state unemployment rates for the latest 4-quarter period. The latter are estimates developed from statistical models used by the Local Area Unemployment Statistics (LAUS) program that incorporate CPS estimates, as well as input data from other sources; these model-based estimates are accessible through the LAUS program homepage.

Alternative measures of labor underutilization by state, fourth quarter of 2008 through third quarter of 2009 averages (percent)

State	Measure
	U-1	U-2	U-3	U-4	U-5	U-6
United States	4.0	5.4	8.5	8.9	9.7	15.2
Alabama	4.8	5.6	9.9	10.4	11.3	15.8
Alaska	2.6	3.8	7.5	7.8	8.8	13.2
Arizona	4.4	6.1	9.5	10.0	10.7	17.2
Arkansas	2.8	4.5	7.4	7.9	8.6	14.1
California	5.3	6.6	10.4	10.9	12.0	19.6
Colorado	2.8	4.2	6.9	7.1	7.7	12.8
Connecticut	3.5	4.6	7.4	8.0	8.8	13.6
Delaware	3.8	4.9	7.9	8.4	9.2	13.5
District of Columbia	4.4	4.7	8.8	9.2	10.4	13.3
Florida	4.9	6.2	9.4	10.0	10.7	17.2
Georgia	4.7	6.1	9.3	9.7	10.4	16.0
Hawaii	3.0	3.8	6.9	7.4	8.4	14.5
Idaho	3.2	5.0	8.2	8.5	9.4	15.7
Illinois	4.4	6.0	9.0	9.5	10.3	15.7
Indiana	4.3	6.2	9.2	9.7	10.4	16.6
Iowa	2.0	3.6	6.0	6.2	6.7	11.0
Kansas	2.5	3.8	6.3	6.5	7.1	11.0
Kentucky	4.4	5.8	9.8	10.2	11.2	16.4
Louisiana	2.7	3.7	6.9	7.3	7.9	10.3
Maine	3.4	4.7	7.9	8.2	9.2	14.0
Maryland	3.1	3.9	6.6	6.8	7.6	11.2
Massachusetts	3.5	5.5	7.8	8.1	8.7	13.2
Michigan	6.7	8.7	12.6	13.3	14.3	20.9
Minnesota	3.1	4.6	7.3	7.6	8.3	13.6
Mississippi	3.6	4.9	8.2	9.1	10.1	14.7
Missouri	3.8	5.2	8.7	9.0	9.5	14.5
Montana	2.6	4.9	7.0	7.2	7.6	12.7
Nebraska	1.8	2.5	4.4	4.6	5.2	8.7
Nevada	5.0	7.3	10.2	10.6	11.1	17.5
New Hampshire	2.6	3.9	5.8	6.1	6.9	11.5
New Jersey	4.1	5.3	8.1	8.5	9.4	13.9
New Mexico	2.5	4.2	6.8	7.1	7.8	13.0
New York	3.8	4.8	7.7	8.3	9.2	13.4
North Carolina	5.1	5.9	9.7	10.2	10.9	16.5
North Dakota	1.1	2.1	3.9	4.1	4.6	7.5
Ohio	4.3	5.6	9.2	9.6	10.6	16.1
Oklahoma	2.2	3.1	5.6	5.7	6.4	9.5
Oregon	5.0	7.7	11.2	11.5	12.3	20.1
Pennsylvania	3.1	4.4	7.3	7.6	8.5	13.0
Rhode Island	5.6	6.7	10.7	11.2	12.1	18.3
South Carolina	5.6	7.0	10.6	11.1	12.0	18.4
South Dakota	1.4	2.7	4.7	5.0	5.5	9.4
Tennessee	4.8	6.5	9.9	10.4	11.1	17.4
Texas	2.6	4.0	6.9	7.2	7.9	12.6
Utah	2.3	4.2	6.4	6.7	7.2	11.3
Vermont	2.6	3.7	6.1	6.3	6.9	11.1
Virginia	2.4	3.1	5.9	6.2	6.8	11.1
Washington	3.2	4.8	8.0	8.4	9.2	14.7
West Virginia	3.2	4.4	7.1	7.7	8.4	12.9
Wisconsin	3.3	5.1	7.6	7.7	8.5	13.2
Wyoming	1.6	3.3	5.3	5.5	6.0	9.5

Michigan registered the highest 4-quarter average rates for all six measures, including a CPS-based unemployment rate of 12.6 percent, a U-1 of 6.7 percent, and a U-6 of 20.9 percent. The states with the next highest CPS-based unemployment rates were Oregon, 11.2 percent; Rhode Island, 10.7 percent; South Carolina, 10.6 percent; and California, 10.4 percent. With the exceptions of Oregon's U-1 and California's U-2, these four states also had the second-through-fifth highest alternative measures, though not in the same rank order.

North Dakota recorded the lowest rates for all six measures, including a CPS-based unemployment rate of 3.9 percent, a U-1 of 1.1 percent, and a U-6 of 7.5 percent. Two other states had values of U-3 below 5.0 percent over the latest 4-quarter average period: Nebraska, 4.4 percent, and South Dakota, 4.7 percent. Wyoming and Oklahoma followed with rates of 5.3 and 5.6 percent, respectively. Except for Oklahoma's U-1 and Wyoming's U-2, these four states also reported the second-through-fifth lowest alternative measures, though not in the same rank order.

There are some interesting exceptions to the general pattern. The District of Columbia was the only jurisdiction with a U-1 nearly as high as its U-2 (4.4 and 4.7 percent, respectively). While the District's U-1 ranked 12th highest, its U-2 was only the 27th 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, Oregon had a gap of 2.7 percentage points between its U-2 and U-1.

Mississippi had the largest gap between its U-4 and U-3 rates, +0.9 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-4 and U-3 is that the former includes discouraged workers. Thus, the large gap for Mississippi is a reflection of the relatively high degree of worker discouragement there. In contrast, Oklahoma and Wisconsin each had a 0.1-percentage point gap between their U-4 and U-3 rates, indicating relatively low incidences of discouragement.

Beyond the marginally attached, who are included in U-5, involuntary part-time workers are included in U-6. The larger the difference between U-6 and U-5, then, the higher the incidence of underemployment. Oregon and California posted the largest gaps between their U-6 and U-5 rates, +7.8 and +7.6 percentage points, respectively. These two states also had among the five highest CPS-based unemployment rates over the 4-quarter average period. Louisiana registered the smallest difference between its U-6 and U-5, +2.4 percentage points, indicating a comparatively low degree of underemployment.

All six measures for all states increased relative to the prior 4-quarter average period. Nevada experienced the largest increases among states in four of the six measures: U-3 (+1.7 percentage points), U-4 and U-5 (+1.8 points each), and U-6 (+2.3 points). Michigan registered the largest increases in U-1 (+1.5 percentage points) and U-2 (+1.6 points) from the prior period.

Though these data pertain to the 4-quarter average period ending in September 2009, the deterioration in the labor market between the fourth quarter of 2008 and the second quarter of 2009 was so rapid and pronounced that many of these measures understate the current degree of labor market underutilization. For example, the U.S. unemployment rate in September 2009 was 9.8 percent (seasonally adjusted), well above the 8.5-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: October 23, 2009