August U-6 Unemployment Rate was 16.8%
The unemployment numbers from August 2009 were released earlier today in the United States.
As expected, the "official" unemployment rate continued its steady march higher after a temporary downtick in July.
The official unemployment rate for August was 9.7%, which is the highest rate that has been posted since June of 1983.
In 1982-83, the United States was battling a two-headed monster of high unemployment rates and rising inflation. The highest rate posted during this period was 10.8% (November and December of 1982). It took almost seven years for the unemployment rate to drop to 5% or lower (5%, March 1989).
Many analysts and economists expect that the unemployment rate will top 10% in early 2010. Given all of the issues that we are currently dealing with, you really have to wonder when the unemployment rate in the United States will dip below 5% again - it seems hard to believe that this will happen within seven years.
The "official" unemployment rate in the United States is the U-3 rate.
However, the U-6 rate offers a much clearer picture of labor underutilization in the United States.
The U-6 rate in August, as mentioned, was 16.8%.
The U-6 rate includes three crucial groups of people that the U-3 rate does not:
1) Discouraged workers who have given up hope for finding a job due to the overall job market
2) Marginally attached workers who are not currently looking for work, but have pursued employment sometime in the "recent past" and want to work
3) Part-time workers who want full-time unemployment but have to settle for part-time jobs due to economic reasons.
Remember - in order to be considered as "unemployed", you had to have looked for a job sometime in the past four weeks.
What do these three groups of people have in common? They all want full-time employment but can't find it.
Here are some interesting tidbits of information and random thoughts after reading the unemployment report from earlier today:
-total nonfarm payroll employment declined by 216k in August
-unemployment rate for adult men was 10.1% in August, while the unemployment rate for adult women was 7.6%
-unemployment rate for teenagers was 25.5%
-9.1 million people in the United States in August were working part-time jobs even though they desired full-time employment
-civilian labor force participation rate was unchanged at 65.5%
-change in total nonfarm payroll employment for June was revised to -463,000 (from -443,000), while July was revised to -276,000 from -247,000
A few questions popped into my mind as I was reading the report earlier today:
1. How high will the unemployment rate climb before topping out?
2. How long will it take for the rate to drop below 5%?
3. How much of a negative impact will there be on the economy long-term if the rate doesn't drop as much as expected?
Sources: BLS.gov - The Employment Situation - August 2009
Historical Unemployment Rates in the United States
Filed under: The Economic Meltdown