The U.S. labor market has improved considerably since the depths of the recession in 2009. However, traditional measures of the labor market may not always tell the full story. Despite the recovery, for example, government efforts to strengthen the job market have remained in place. Last week, the Federal Reserve Board announced it would continue keeping interest rates near zero, citing improving, but still weak, labor underutilization.
The traditional unemployment rate does not include all jobless individuals, nor is it a percentage of all the people available for work. It is a measure of jobless working-age Americans actively seeking work as a percentage of the labor force, which is defined as the total number of employed and unemployed workers. To account for people left out of the calculation, the Bureau of Labor Statistics (BLS) provides alternative measures of labor underutilization.
The underemployment rate, also known as U-6, includes the standard…
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