In 1994, the BLS made huge changes in the calculation of the unemployment rate. So that’s all the further back I look. 
Unemployment Rate Notes
- The official Unemployment Rate is U-3, defined as the percentage of people unemployed divided by the labor force, multiplied by 100.
- The BLS publishes the U3 rate to one decimal place. I calculate the rate to two places. Data is not readily available to calculate U-5 and U6 (defined below) to two decimal places so I show the published rate.
- The U-6 rate jumped from 7.5 percent to 8.0 percent this month which caught everyone’s attention.
BLS New Definitions
Beginning January 1, 1994, the BLS introduced Alternate Unemployment Measures.
- U-1 People unemployed 15 weeks or longer, as a percent of the civilian labor force
- U-2 Job losers and people who completed temporary jobs, as a percent of the civilian labor force
- U-3 Total unemployed, as a percent of the civilian labor force (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 people marginally attached to the labor force, as a percent of the civilian labor force plus all people marginally attached to the labor force
- U-6 Total unemployed, plus all people marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all people marginally attached to the labor force
Why the Changes?
A: President Clinton wanted to make the official unemployment rate look better.
So, the BLS concocted discouraged workers and marginally attached workers and excluded them from the official rate.
Marginal Attachment
People marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months.
Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work.
People employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.
Historically, discouraged and marginally attached workers were once considered unemployed. That is now the U-5 rate.
U-6 = U-5 + people who want a full time job but only work part time.
Did U-6 Jump a Half-Point?
Officially yes, but who the hell knows?
How accurate is the December and January data? How accurate is anything?
Employment Drops by 588,000 as Jobs Increase by Weaker than Expected 151,000
Earlier today I noted Employment Drops by 588,000 as Jobs Increase by Weaker than Expected 151,000
There was a huge increase in part-time work sending the U-6 unemployment rate to 8.0 percent up from 7.5 percent.
Total full-time work dropped by 1.22 million.
Final Thoughts
Despite all the work I put into these reports, all of the BLS monthly data is total garbage.
I do the best with BLS data that I can, or anyone can.
The quarterly QCEW and Business Employment (BED)reports represent a 96 percent sample. But those reports lag by about 5 months.
The QCEW reports have been hugely negative and there is every reason to believe QCEW trends will continue.
Related Posts
January 31, 2025: The BLS Confirms US is Now Losing Jobs in Net Business Creation
The BLS BED report provides further confirmation the BLS Birth/Death jobs model is seriously screwed up.
February 4, 2025: Job Openings Drop by 556,000 in December, Quits Show Job Finding Stress
Job openings have collapsed. And the number of quits confirms people are staying put.
February 7, 2025: Huge BLS Benchmark Revisions Remove 610,000 Jobs From 2024
Every February the BLS does annual benchmark revisions for the prior year. This year there were huge revisions.
The first link above on BED is a key item.
The Birth-Death model that feeds the monthly jobs report is bogus. It has been screwed up since Covid, first underreporting jobs then overreporting them.
We can say that U-5 and U-6 rates are above the levels at the onset of the 2001 recession.
A good piece, Mish. The US employment participation rate is decreasing.Retrospectively, the angst with the tariffs, the rapidly deteriorating consumer sentiment, the historically high subprime auto loan default rate, the corporate mass firings and decreased job openings(prior to DOGE firings), and the recent ISM data skewed by increased imports(secondary to anticipated tariffs) will all be seen as obvious ongoing data points ‘clearly’ showing that peak US SPX equity valuation had been reached on 19 Feb 2025.
“President Clinton wanted to make the official unemployment rate look better.”
And presidents of both parties have used the same categories ever since.
Correct
For the first time in 15 months, the job gains for native-born Americans exceeded job gains for migrant and foreign-born workers. This is the first time that’s happened in more than 15 months. Employment for native-born workers went up by 284,000 while foreign-born workers went down by 87,000.
Imagine what employment / tax collections would be like if we could slowly start replacing illegals with able-bodied Americans in residential construction? WOW!
Such a BIG BEAUTIFUL Jobs Report. Winning!
The Sahm-McKelvey indicator has had an overall positive dt2 slope since Sept 2021 (so much money/credit was manufactured by Trump in 2020 and Biden in 2021). Maybe it is the second time derivative of the unemployment indicator that is the real predictive indicator of a (massive) recession …
Numbers don’t lie. History does not repeat, it rhymes. Considering the last 4 years and the two years of Covid, we are long overdue. This thought of lowering rates does not jive with actual inflation, not the fake Fed Number, but real inflation. The number of dollars that have been created over the last 8 years is staggering. Frankly, rates are still to low if one is being honest.
“numbers don’t lie” LMFAO…
Didn’t you listen to powell’s speech this morning? I turned the stock market on a dime and continues to climb. He said the economy, including employment, is doing just fine and no need to lower interest rates just yet. As a result, FOMO is alive and strong.
I’m operating under the thesis the labor market is in a recession. I gladly work extra hours for job security.
Unemployment rate: the yellow and the blue are trending down, but the brown U-6 – BLS bs – is up while business creation is rising every week. That’s a historical anomaly. U-6: U-5 + people who can’t always get what they want. If 1W SPX close > Jan 13 low it will be a historical week like Oct 4 2011.