Alternative Measures of Labor Underutilization for States

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 www.bls.gov/news.release/empsit.t12.htm). 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 actually 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.

Due to small state sample sizes, monthly state CPS data do not meet BLS publication standards, and annual average estimates of alternative measures for states had not been directly tabulated until recently. Beginning with 2007 and 2008 averages, BLS is making available for the first time these alternative measures for states. These annual data were developed from quarterly tabulations in which the components of each measure are rounded to the nearest hundred. As a result, the newly tabulated estimates contain slightly more rounding error than that found in typical CPS annual average tabulations (in which rates are based on unrounded data).

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.

Alternative measures of labor underutilization by state, 2008 annual averages (percent)

State	Measure
	U-1	U-2	U-3	U-4	U-5	U-6
Alabama	2.3	3.0	5.6	5.9	6.6	9.8
Alaska	1.8	3.3	6.8	7.1	8.2	12.0
Arizona	1.6	3.1	5.9	6.1	6.7	10.7
Arkansas	1.5	2.7	5.2	5.5	5.9	10.2
California	2.8	4.0	7.1	7.4	8.3	13.4
Colorado	1.5	2.5	4.8	4.9	5.4	9.2
Connecticut	2.2	3.2	5.7	6.1	6.8	10.3
Delaware	1.9	2.7	5.0	5.2	5.7	9.0
District of Columbia	2.8	2.8	6.6	6.8	7.8	10.0
Florida	2.4	3.4	6.1	6.4	7.1	11.9
Georgia	2.5	3.5	6.4	6.7	7.3	11.1
Hawaii	1.1	1.8	4.2	4.4	5.2	8.8
Idaho	1.4	3.0	5.4	5.6	6.1	10.4
Illinois	2.6	3.6	6.6	6.9	7.6	11.7
Indiana	2.2	3.3	6.0	6.3	6.9	10.6
Iowa	1.0	1.9	4.0	4.1	4.6	7.6
Kansas	1.1	2.1	4.5	4.6	5.2	7.8
Kentucky	2.1	3.2	6.3	6.6	7.6	10.8
Louisiana	1.8	2.3	5.0	5.2	5.8	7.8
Maine	1.6	2.9	5.4	5.6	6.6	10.9
Maryland	1.4	2.0	4.2	4.5	5.2	7.8
Massachusetts	2.1	3.0	5.3	5.6	6.3	9.0
Michigan	3.6	4.7	8.3	8.9	9.9	15.1
Minnesota	2.1	3.0	5.5	5.8	6.5	10.2
Mississippi	2.2	3.2	6.5	7.0	7.9	11.2
Missouri	2.1	3.4	6.1	6.3	6.9	10.1
Montana	1.2	2.6	5.2	5.3	5.6	10.3
Nebraska	0.8	1.5	3.3	3.3	3.7	6.1
Nevada	2.3	3.7	6.1	6.4	6.7	11.1
New Hampshire	1.2	2.1	3.8	4.0	4.6	7.8
New Jersey	2.2	3.2	5.4	5.7	6.3	9.5
New Mexico	1.0	1.6	4.4	4.7	5.3	8.9
New York	2.1	3.1	5.5	5.9	6.6	9.6
North Carolina	2.6	3.3	6.4	6.7	7.5	11.3
North Dakota	0.7	1.6	3.2	3.3	3.7	6.1
Ohio	2.2	3.3	6.5	6.7	7.7	11.4
Oklahoma	1.3	1.7	3.7	3.9	4.5	6.5
Oregon	1.9	4.2	6.4	6.6	7.2	12.6
Pennsylvania	1.8	2.8	5.3	5.5	6.2	9.3
Rhode Island	3.3	4.8	7.9	8.2	9.2	13.2
South Carolina	2.9	3.7	6.7	7.0	7.8	12.1
South Dakota	0.6	1.4	3.0	3.4	3.8	6.2
Tennessee	2.2	3.4	6.6	6.9	7.6	11.4
Texas	1.3	2.3	4.8	5.1	5.8	9.1
Utah	0.8	1.6	3.5	3.6	4.0	6.2
Vermont	1.5	2.6	4.9	5.1	5.8	9.1
Virginia	1.2	2.0	4.0	4.1	4.6	7.5
Washington	1.5	2.8	5.3	5.5	6.3	10.4
West Virginia	1.5	2.2	4.4	4.8	5.2	9.1
Wisconsin	1.6	2.5	4.7	4.8	5.4	8.6
Wyoming	0.5	1.3	3.0	3.0	3.4	5.7

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 on this page and in the comparisons below, the unemployment rates (U-3) that are shown are derived directly from the CPS. As a result, the U-3 measures on this page may differ from the official state unemployment rates for 2008. The latter are estimates developed from models used by the Local Area Unemployment Statistics program that incorporate CPS estimates, as well as input data from other sources; these model-based estimates are available at www.bls.gov/lau/lastrk08.htm.

Michigan had the highest 2008 rates for five of the six measures, including a CPS-based unemployment rate of 8.3 percent, a U-1 of 3.6 percent, and a U-6 of 15.1 percent. (Rhode Island's U-2, at 4.8 percent, was slightly higher than Michigan's 4.7 percent.) Rhode Island and California had the next highest unemployment rates, 7.9 and 7.1 percent, respectively, and were among the five highest in all the remaining measures.

South Dakota and Wyoming had the lowest unemployment rates in 2008, 3.0 percent each. Wyoming also had the lowest rates in all five other measures, ranging from 0.5 percent for U-1 to 5.7 percent for U-6. The five states with the lowest unemployment rates—Nebraska, North Dakota, and Utah, in addition to South Dakota and Wyoming—ranked as the five lowest for the other five measures of labor underutilization.

There are some interesting exceptions to the general rule. Alaska had the fourth highest unemployment rate, 6.8 percent, but ranked 25th highest among states in the long-term unemployment measure, U-1, 1.8 percent. The gap between U-1 and U-3 is consistent with other data that show Alaska with a relatively low share of unemployed with duration of 15 or more weeks in 2008. Some of this stems from the extreme seasonality of employment in the state.

The District of Columbia also showed an unusual pattern, with a U-1 of 2.8 percent (5th highest) and a U-3 of 6.6 percent (6th highest), but a U-2 of 2.8 percent (27th highest). The share of job losers is low and the share of unemployed entrants is high in the District. The District was the only jurisdiction with a U-1 as high as its U-2.

Though these data pertain to the recently-ended calendar year, the deterioration in the labor market in 2008 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 December 2008 was 7.2 percent (seasonally adjusted), well above the 5.8 percent average for the year as a whole.

For additional information on state estimates derived directly from the CPS, see www.bls.gov/gps/notescps.htm.

Note: Some state rankings cited above include ties.

 

Last Modified Date: March 16, 2009