There are several ways to measure the amount of slack in the labour market. The most commonly cited measure is the unemployment rate, which stands at 5.6%.
Specifically, this is the U-3 unemployment rate, which includes the folks actively looking for jobs.
The Bureau of Labour Statistics also provides a U-6 unemployment rate — aka the underemployment rate — which includes people who are “marginally attached to the labour force.”
“Persons marginally attached to the labour 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,” the BLS explains.
People often cite the elevated U-6 rate as a sign of ongoing problems in the labour market.
“To be honest, this is my least favourite indicator on the planet,” UBS economist Drew Matus said to Bloomberg’s Tom Keene.
“Asking people if they were offered a job, if they would take one … America’s got a strong bias towards saying yes to that question,” he explained. “Because, Americans don’t like people who don’t want to work. And so that number overstates the number of people in the labour force looking for work.”
That seems reasonable enough. If someone offers you something that you weren’t looking for, then why not take it?
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