Real Unemployment Rate With Calculations

Does the Government Lie About Unemployment?

The real unemployment rate (U-6) is a broader definition of unemployment than the official unemployment rate (U-3). In December 2018, it was 7.6 percent.

The U-3 is the rate most often reported in the media. In the U-3 rate, the Bureau of Labor Statistics only counts people without jobs who are in the labor force. To remain in the labor force, they must have looked for a job in the last four weeks.

The U-6, or real unemployment rate, includes the underemployed, the marginally attached, and discouraged workers. For that reason, it is around double the U-3 report.

Underemployed people are part-time workers who would prefer full-time jobs. The BLS counts them as employed and in the labor force.

The marginally attached are those who have looked for work in the last year but not the previous four weeks. They are not included in the labor force participation rate.

Among the marginally attached are the . They have given up looking for work altogether. They could have gone back to school, gotten pregnant, or become disabled. They may or may not return to the labor force, depending on their circumstances. Once they haven't looked for a job in 12 months, they're no longer counted as marginally attached.

The BLS issues both the U-3 and the U-6 in each month's jobs report. Surprisingly, there isn't as much media attention paid to the real unemployment rate.

But even former Federal Reserve Chair Janet Yellen said it paints a clearer picture of actual U.S. unemployment.

Real Unemployment Rate Formula Using Current Statistics

In December 2018, the real unemployment rate (U-6) was 7.6 percent. It's almost double the widely reported unemployment rate (U-3) of 3.7 percent.

Here's how to calculate both.

Step 1. Calculate the official unemployment rate (U-3).

U-3 = 6.294 million unemployed workers / 163.240 million in the labor force = 3.9 percent.

Step 2. Add in marginally attached workers. There were 1.556 million people who were marginally attached to the labor force. Add this to both the number of unemployed and the labor force.

U-5 = (6.294 million + 1.556 million) / (163.240 million + 1.556 million) = 7.850 million / 164.796 million = 4.8 percent.

Step 3. Add in part-time workers. There were 4.657 million people who were working part-time but would prefer full-time work. Add them to the unemployed with marginal workers. They're already in the labor force.

U-6 = (7.850 million + 4.657 million) / (164.796 million) = 12.507 million / 164.796 million = 7.6 percent. (Source: "," Bureau of Labor Statistics.)

Compare the Real Unemployment Rate

To put things in perspective, here's the official unemployment rate compared to the real rate since 1994. That’s the first year the BLS collected data on U-6. The rates given are for January of each year. To see unemployment since 1929, go to Unemployment Rate by Year.

Throughout the years, the official rate is a little more than half the real rate.

That remains true no matter how well the economy is doing. Even in 2000, when the official rate below the natural unemployment rate of 4.5 percent, the real rate was almost double, at 7.1 percent. In 2010, when the unemployment rate was its highest at 9.8 percent, the real rate was still almost double, at 16.7 percent.

Year (as of January)U3 (Official)U6 (Real)U3/U6Comments
19946.6%11.8%56%The first year BLS reported U6
19955.6%10.2%55%
19965.6%9.8%57%
19975.3%9.4%56%
19984.6%8.4%55%
19994.3%7.7%56%
20004.0% (Record Low)7.1%56%Stock market crashed in March
20014.2%7.3%58%
20025.7%9.5%60%U3 closest to U6
20035.8%10.0%58%
20045.7%9.9%58%
20055.3%9.3%57%
20064.7%8.4%56%
20074.6%8.4%55%
20085.0%9.2%54%
20097.8%14.2%55%High of 10.2% in Oct
20109.8%16.7%59%
20119.1%16.2%56%
20128.3%15.2%55%
20138.0%14.5%55%
20146.6%12.7%52%
20155.7% 11.3% 50%