DLT: Alternate measures register higher unemployment in R.I.

USING FOUR ALTERNATIVE ways to measure it, Rhode Island's jobless rate for the four quarters ended March 2013 could range from 9.8 percent to 16.7 percent, according to a report released Friday from the R.I. Department of Labor and Training.
Posted 5/31/13

CRANSTON - Using alternate measures, Rhode Island’s state unemployment average could be considered 9.8, 10.2, 11 or 16.7 percent, according to a report released Friday by the R.I. Department of Labor and Training.

For the four quarters ended March 2013, the official state unemployment rate, which refers to the percentage of individuals in the labor force without a job, was 10 percent.

However, using the alternate measures, which are derived from the Current Population Survey and referred to as U-3 to U-6, provide narrower as well as broader definitions of labor under-utilization.

“These state unemployment averages which are derived solely from the CPS data are not strictly comparable to the official state average unemployment rates, which also incorporate establishment employment estimates, unemployment insurance claims data and historic trends. However, these alternative measures can provide insight into the volume of states’ discouraged populations and those working part-time for economic reasons,” according to a DLT release.

The U-3 rate, which takes into account the total unemployed persons as a percentage of the civilian labor force, is considered to be the closest to the standard definition of unemployment. For the four quarters ending March 2013, the U-3 rate was 9.8 percent.

The U-4 rate, which also includes “discouraged workers,” or individuals who want a job, but have given up on finding one, yields an unemployment rate of 10.2 percent for the same time period.

Similarly, the U-5 rate takes into account total unemployed persons, discouraged workers and all other “marginally attached” workers, or individuals who want a job, are currently available for work, but have not looked for one in the past year for reasons other than discouragement. Unemployment for March 2013 under the U-5 measure is 11 percent.

Registering the biggest difference between the standard definition, was the U-6 measure, which includes discouraged workers, marginally attached workers and those working part-time for economic reasons. For March 2013, the U-6 rate was 16.7 percent. Most of the increase, according to the DLT, was associated with the involuntary part-time worker. Prior to the recession involuntary part-time workers represented 2.7 percent of the labor force.

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