Objective: To establish a comprehensive and transparent system for counting unemployed citizens that accurately reflects the state of the labor market. This policy will set new guidelines for how unemployment statistics are calculated and reported, aiming to provide a realistic view of the labor force by including individuals who are currently overlooked in standard unemployment measures.
Background: The official unemployment rate, as calculated by the Bureau of Labor Statistics (BLS), focuses on individuals actively seeking work within the past four weeks. However, this approach excludes several groups, including discouraged workers, underemployed individuals, and those who may only search for jobs intermittently due to long-term challenges in finding work. This policy aims to broaden the definition and calculation of unemployment to account for all individuals who are not employed but wish to work, providing a clearer picture of economic health and labor market needs.
Policy Components:
- Expand Unemployment Categories in Reporting:
- U-6 Measure as Primary Unemployment Statistic: Redefine the primary unemployment measure to the U-6 rate, which includes discouraged workers (those not actively searching because they believe no jobs are available) and the underemployed (those working part-time involuntarily due to economic reasons).
- Introduce a “Comprehensive Unemployment Rate (U-7)”: Develop a new measure, U-7, which includes all U-6 factors plus individuals who have been out of work for over a year but still want employment, as well as individuals working below their skill level due to lack of available opportunities in their field.
- Track Long-Term Unemployment Separately:
- Long-Term Unemployment Category: Implement a separate reporting category that identifies individuals unemployed for six months or longer, whether or not they have actively searched in the past month, as this group often faces the greatest difficulty reentering the labor force.
- Public Report on Long-Term Unemployment Trends: Publish an annual report detailing trends in long-term unemployment, identifying the specific barriers that prevent reemployment, and potential skill gaps that might be addressed through workforce development initiatives.
- Include Underemployed and Marginally Attached Workers:
- Measure Underemployment Rates in Skilled Labor: Track individuals who work in positions below their qualifications or experience level as a separate category, providing insight into skill mismatches and economic underutilization.
- Marginally Attached Workers: Count those who want and are available for work but are not actively searching due to discouragement, family responsibilities, or lack of transportation access.
- Introduce Real-Time Reporting of Job Market Inactivity:
- Use Monthly Inactivity and Transition Reporting: Track and publish monthly data on workforce inactivity, reporting the number of citizens transitioning between jobs, engaged in education or retraining, and those who are in between career changes.
- Real-Time Data on Workforce Participation: Report workforce participation rate adjustments in real-time using survey data, which includes insights on sectors with the highest rates of inactivity and low labor participation.
- Revise Survey Techniques and Improve Data Collection:
- Use Broader, Frequent Survey Data: Partner with local and state governments to enhance the Current Population Survey (CPS) with broader, real-time data collection to improve accuracy. Include questions that capture intermittent work and sporadic job searching due to market challenges.
- Identify Regional Employment Disparities: Provide state and regional unemployment rates that reflect localized labor market conditions, including rural and urban distinctions, to support regional economic planning.
- Introduce Quarterly “Real Workforce Engagement” Reports:
- Workforce Engagement Report: Publish a quarterly report that includes the U-3 (official rate), U-6, and new U-7 rates, as well as data on underemployment, long-term unemployment, and regional disparities.
- Demographic Breakdown: Include breakdowns by demographics such as age, race, education level, and skill sector, highlighting specific areas with higher unemployment or underemployment to inform policy and training needs.