On the margins: Calculating the 'total unemployment' rate
There are effectively two unemployment rates, one including all discouraged and underutilized labor, and one a more restricted grouping. The “total” rate of unemployment should include both traditionally unemployed and underutilized workers.
This chart shows the rate of “total unemployment” including all marginally attached workers, as compared to the more traditionally reported unemployment rate, charted according to percent change over a twelve year span. The total unemployment rate rose in June, while the traditional rate remained flat.
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Last week's Employment Situation report showed that in June “total unemployment” including all marginally attached workers increased to 14.9% while the traditionally reported unemployment rate went flat at 8.2%.
The traditional unemployment rate is calculated from the monthly household survey results using a fairly explicit definition of “unemployed” (essentially unemployed and currently looking for full time employment) leaving many workers to be considered effectively “on the margin” either employed in part time work when full time is preferred or simply unemployed and no longer looking for work.
The Bureau of Labor Statistics considers “marginally attached” workers (including discouraged workers) and persons who have settled for part time employment to be “underutilized” labor.
The broadest view of unemployment would include both traditionally unemployed workers and all other underutilized workers.
To calculate the “total” rate of unemployment we would simply use this larger group rather than the smaller and more restrictive “unemployed” group used in the traditional unemployment rate calculation.