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Counting the margin: Real unemployment for August 2010

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(Read caption) Total unemployment from mid-1997 to the present. The blue line represents everyone out of work, whether or not they are currently job hunting ('U-6'). The red line is the number the government publishes, which only represents people who are actively seeking employment ('U-3').

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Today’s Employment Situation report showed that in August “total unemployment” including all marginally attached workers climbed to 16.7% while the traditionally reported unemployment rate also increased slightly to 9.6%.

The traditional unemployment rate is calculated from the monthly household survey results using a fairly explicit definition of “unemployed” (essentially unemployed and currently looking for full time employment) leaving many workers to be considered effectively “on the margin” either employed in part time work when full time is preferred or simply unemployed and no longer looking for work.

The Bureau of Labor Statistics considers “marginally attached” workers (including discouraged workers) and persons who have settled for part time employment to be “underutilized” labor.

The broadest view of unemployment would include both traditionally unemployed workers and all other underutilized workers.

To calculate the “total” rate of unemployment we would simply use this larger group rather than the smaller and more restrictive “unemployed” group used in the traditional unemployment rate calculation.

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