Alternative Measures of Labor Underutilization for States, Third Quarter of 2011 through Second Quarter of 2012 Averages

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 table 15.) The official concept of unemployment (as measured in the CPS by U-3 in the U-1 to U-6 range of alternatives) includes all jobless persons who are available to take a job and have actively sought work in the past four weeks. This concept 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.

BLS is committed to updating these data on a 4-quarter moving-average basis. The analysis that follows pertains to the averages from the third quarter of 2011 through the second quarter of 2012. Data are also available for prior time periods back to 2003.

The six state measures are based on the same definitions as those published for the United States:

• 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.

Definitions for the economic characteristics underlying the three broader measures of labor underutilization are worth mentioning here. Discouraged workers (U-4, U-5, and U-6 measures) are persons who are not in the labor force, want and are available for work, and had looked for a job sometime in the prior 12 months. They are not counted as unemployed because they had not searched for work in the prior 4 weeks, for the specific reason that they believed no jobs were available for them. The marginally attached (U-5 and U-6 measures) are a group that includes discouraged workers. The criteria for the marginally attached are the same as for discouraged workers, with the exception that any reason could have been cited for the lack of job search in the prior 4 weeks. Persons employed part time for economic reasons (U-6 measure) are those working less than 35 hours per week who want to work full time, are available to do so, and gave an economic reason (their hours had been cut back or they were unable to find a full-time job) for working part time. These individuals are sometimes referred to as involuntary part-time workers.

Generally, all six measures of labor underutilization move together over time, including across business cycles. Similarly, states that have high 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 and in the comparisons below, the unemployment rates (U-3) that are shown are derived directly from the CPS, because this is the only source of data for the various components of the other five measures. As a result, these U-3 measures may differ from the official state unemployment rates for the same period. The latter are estimates developed from statistical models that greatly improve the reliability of the top-side labor force and unemployment estimates. Those models, developed by the Local Area Unemployment Statistics (LAUS) program, incorporate CPS estimates, as well as input data from other sources. The model-based estimates are accessible through the LAUS program homepage.

Alternative measures of labor underutilization by state, third quarter of 2011 through second quarter of 2012 averages (percent)

State	Measure
	U-1	U-2	U-3	U-4	U-5	U-6
United States	4.9	4.8	8.5	9.1	10.0	15.3
Alabama	4.9	4.9	8.6	9.2	10.3	14.4
Alaska	3.0	4.2	7.6	8.1	9.1	13.2
Arizona	4.8	4.7	8.7	9.2	10.3	16.6
Arkansas	4.0	4.0	7.8	8.3	9.2	13.4
California	6.7	6.5	11.2	11.8	13.0	20.3
Colorado	4.6	5.1	8.3	8.5	9.4	14.8
Connecticut	5.1	5.1	8.2	8.8	9.6	14.5
Delaware	4.3	4.1	7.0	7.5	8.6	13.3
District of Columbia	6.7	4.6	9.7	10.4	11.6	14.5
Florida	6.2	5.4	9.2	10.1	10.8	17.0
Georgia	6.0	5.1	9.7	10.4	11.4	16.4
Hawaii	4.3	3.8	7.3	7.7	9.0	14.8
Idaho	3.9	4.1	7.9	8.2	9.2	15.7
Illinois	5.9	5.7	9.4	10.0	10.6	16.5
Indiana	5.1	4.6	8.9	9.3	10.1	15.0
Iowa	2.4	2.7	5.4	5.6	6.4	10.5
Kansas	3.0	3.5	6.3	6.6	7.2	11.2
Kentucky	4.6	5.0	8.8	9.3	10.1	14.9
Louisiana	4.3	3.4	7.7	8.2	9.3	13.0
Maine	4.0	4.7	7.8	8.1	9.4	14.8
Maryland	4.1	4.0	7.1	7.8	8.8	12.7
Massachusetts	3.8	4.2	6.6	7.2	8.0	13.5
Michigan	5.5	5.3	9.4	10.3	11.4	17.4
Minnesota	2.9	3.2	5.9	6.3	7.1	12.1
Mississippi	5.6	5.2	9.7	10.1	11.5	15.4
Missouri	4.0	4.4	7.5	7.9	8.6	13.2
Montana	2.8	3.6	6.5	6.8	7.7	14.3
Nebraska	1.8	2.1	4.3	4.5	5.0	9.1
Nevada	7.9	7.7	12.3	13.4	14.9	22.1
New Hampshire	2.7	3.3	5.5	5.8	6.5	11.2
New Jersey	5.9	6.0	9.2	9.9	10.7	15.5
New Mexico	4.3	3.4	7.3	7.8	9.4	15.3
New York	5.3	5.1	8.7	9.4	10.4	14.6
North Carolina	6.2	5.7	9.8	10.3	11.2	17.5
North Dakota	1.1	1.6	3.4	3.5	4.0	6.1
Ohio	4.5	4.5	8.0	8.3	9.2	14.0
Oklahoma	2.6	2.9	5.8	6.2	7.1	10.3
Oregon	4.7	5.4	9.1	9.4	10.7	17.4
Pennsylvania	4.2	4.6	7.7	8.2	9.2	13.9
Rhode Island	7.0	7.1	11.2	11.8	12.7	18.9
South Carolina	5.9	5.6	10.0	10.8	11.8	17.0
South Dakota	1.2	1.8	4.5	5.1	5.7	8.6
Tennessee	4.5	4.5	8.2	8.7	9.6	13.8
Texas	3.6	3.7	7.3	7.8	8.5	13.1
Utah	2.9	3.3	6.2	6.6	7.3	12.2
Vermont	2.1	3.1	5.3	5.6	6.4	10.9
Virginia	3.7	3.3	6.5	6.9	7.6	12.0
Washington	4.8	5.0	8.7	9.2	10.4	17.0
West Virginia	3.9	4.0	7.5	8.0	8.7	12.8
Wisconsin	3.7	4.0	7.3	7.6	8.4	13.3
Wyoming	2.3	2.8	5.8	6.1	6.8	10.7
Substate areas
Los Angeles County	7.2	6.6	11.8	12.5	13.6	22.1
New York City	6.4	5.8	9.7	10.7	11.8	15.8

For the 4-quarter average period ending in June 2012, Nevada again reported the highest rates for all six alternative measures of labor underutilization. Nevada’s rates ranged from a U-2 of 7.7 percent to a U-6 of 22.1 percent, including a CPS-based unemployment rate, U-3, of 12.3 percent. The next highest U-3 rates were recorded in California and Rhode Island, 11.2 percent each. After Nevada, these two states had the highest rates for each of the other alternative measures, though not in the same rank order.

North Dakota continued to record the lowest rates for all six measures, ranging from a U-1 of 1.1 percent to a U-6 of 6.1 percent, including a U-3 of 3.4 percent. Nebraska and South Dakota had the next lowest U-3 rates, 4.3 and 4.5 percent, respectively, and also ranked among the lowest three states for the remaining measures. Six other states had U-3 values of less than 6.0 percent over the latest 4-quarter period: Vermont, 5.3 percent; Iowa, 5.4 percent; New Hampshire, 5.5 percent; Oklahoma and Wyoming, 5.8 percent each; and Minnesota, 5.9 percent. These states also had among the lowest 10 rates for four other measures: U-1, U-2, U-4, and U-5. Other than Minnesota, which ranked 11^th, these states had among the lowest 10 values for U-6 as well.

In general, the alternative measures in any given state increase from U-1 to U-6, as they usually do at the national level. However, many states had U-1 measures that exceeded their U-2 rates. This was the case in 18 states and the District of Columbia for the latest 4-quarter period. The largest of these gaps were noted in the District of Columbia (-2.1 percentage points); Georgia, Louisiana, and New Mexico (-0.9 point each); and Florida (-0.8 point). Nationally, the gap continued to be -0.1 percentage point during the 4-quarter period ending in June 2012.

Nevada had the largest gap between its U-3 and U-4 rates, +1.1 percentage points. The difference between U-3 and U-4 is that the latter includes discouraged workers. Thus, a large gap is a reflection of a relatively high degree of would-be job-seeker discouragement. In contrast, North Dakota had the smallest gap between its U-3 and U-4 rates, +0.1 percentage point, indicating a relatively low incidence of discouragement.

In addition to the marginally attached, who are included in U-5, involuntary part-time workers are included in U-6. The larger the difference between U-5 and U-6, the higher the incidence of this form of "underemployment." California posted the largest gap between its U-5 and U-6 rates, +7.3 percentage points, followed by Nevada, +7.2 points. North Dakota registered the smallest difference between its U-5 and U-6 rates, +2.1 percentage points, indicating a comparatively low degree of underemployment.

Overall, states experienced far more declines than increases in the alternative measures relative to the prior 4-quarter average period, reflecting the continuing improvement in the national labor market. For each measure, between 34 and 40 states had decreases from the previous period. The largest decreases were: U-1, Alabama, Arizona, Indiana, and Missouri (-0.5 percentage point each); U-2, Idaho (-0.6 point); U-3, the District of Columbia (-0.8 point); U-4, Alabama and the District of Columbia (-0.7 point each); and U-5 and U-6, the District of Columbia (-0.9 point and -1.1 points, respectively). Altogether, 25 states and the District of Columbia experienced decreases in all six alternative measures.

Increases in the various measures relative to the prior 4-quarter period were rather limited. Seven states noted increases in U-1, while six states registered increases in the other five measures. Additionally, the increases were rather small in magnitude. The largest increases were: U-1, Louisiana and New York (+0.2 percentage point each); U-2, Alaska (+0.2 point); U-3 through U-6, New York (+0.3 point in all measures, with the exception of +0.2 point in U-4). New York was the only state that experienced an increase in all six alternative measures.

In 36 states, all six measures decreased relative to the same period a year earlier, while only Rhode Island experienced an over-the-year increase in all six measures. The measures posting the largest number of declines were U-2 and U-4, where 46 states and the District of Columbia showed improvements over the year. The largest decline in U-2 occurred in Michigan (-1.5 percentage points), while the largest decreases in U-4 were recorded in Alabama, Michigan, Missouri, and Utah (-1.7 points each).

Declines in the latest 4-quarter average period relative to that ending in June 2011 were more prevalent than those relative to the period ending in March 2012. The greatest differences in the number of declines were noted in U-1 and U-4, and the least in U-3. This suggest that improvements in the labor market were greater over the year than over the preceding 4-quarter average period for the long-term unemployed and discouraged workers, and less for those defined as unemployed under the official definition.

Many states with extreme measures, either high or low, maintained their general place in the rankings of alternative measures over the year. California, Nevada, North Carolina, Rhode Island, and South Carolina had rates among the 10 highest for each measure in both the latest four quarters and the four quarters ending in June 2011. Similarly, Iowa, Nebraska, New Hampshire, North Dakota, Oklahoma, South Dakota, Vermont, and Wyoming had rates among the 10 lowest for each measure in both periods.

The alternative measures for states are analyzed on a 4-quarter average basis in order to increase the reliability of the CPS estimates, which are based on relatively small sample sizes at the state level, and to eliminate seasonality. Due to the inclusion of lagged quarters, the state alternative measures may not fully reflect the current status of the labor market.

For additional information on state estimates derived directly from the CPS, see notes on subnational CPS data.

Note: Some state rankings cited above include ties. Data are calculated from quarterly tables in which the components of each measure are rounded to the nearest hundred. As a result, these measures contain slightly more rounding error than that found in typical CPS annual average tabulations (in which rates are calculated based on unrounded data). Due to small state sample sizes, neither monthly nor quarterly state data from the CPS satisfy BLS publication standards.

The next issuance of the alternative measures of labor underutilization for states, covering the four quarters ending in September 2012, is tentatively scheduled for Friday, October 26.

 

Last Modified Date: July 27, 2012