Measures of Labor Underutilization in Louisiana – 2012

In 2012, the broadest measure of labor underutilization, designated U-6 (which includes the unemployed, workers employed part time for economic reasons, and those marginally attached to the labor force), was 11.9 percent in Louisiana, down from 13.4 percent in 2011, the U.S. Bureau of Labor Statistics reported today. (See table 1.) Regional Commissioner Stanley W. Suchman noted that 2011 marked the peak U-6 unemployment rate for the state since this series became available in 2003. (See chart 1.) Nationally, the U-6 rate averaged 14.7 percent in 2012.

The official concept of unemployment, U-3 in the U-1 to U-6 range of measures, includes all jobless persons who are available to take a job and have actively sought work in the past four weeks. In Louisiana, 7.1 percent of the labor force was unemployed as measured by U-3 in 2012. By comparison, 8.1 percent were jobless nationwide. (The official measure of unemployment in states is derived using a statistical model that incorporates data from the Current Population Survey [CPS] and other sources, and this model-based estimate can differ from the direct CPS estimate discussed here.)

Louisiana had 146,500 unemployed residents in 2012 according to the Current Population Survey. In addition, there were 71,900 workers who were employed part time for economic reasons (also known as involuntary part time). These individuals were working part time because of slack work or business conditions, or because they were unable to find a full-time job. (See chart 2.) Nationwide, there were 8.1 million individuals working part time for economic reasons in 2012.

In 2012, the number of individuals considered to be marginally attached to the labor force in Louisiana was 32,800. People marginally attached to the labor force are not working but indicate that they would like to work, are available to work, and have looked for work at some time during the past 12 months even though they had not searched for work in the 4 weeks preceding the survey. In the United States, the number marginally attached totaled 2.5 million in 2012.

Discouraged workers, a subset of the marginally attached, are persons who are not currently looking for work because they believe no jobs are available for them. In 2012, there were 11,600 discouraged workers in Louisiana, accounting for slightly more than one-third of all marginally attached workers in the state. The U-4 measure, which adds discouraged workers to the number of the unemployed (expressed as percentage of the labor force plus the number of discouraged workers), was 7.6 percent in Louisiana in 2012 compared with 8.6 percent nationwide.

From 2011 to 2012, all six rates of labor underutilization improved in Louisiana and for the nation. Among the narrower range of alternative measures, that is U-1 and U-2, improvements over the year were greater for the nation than the state. For instance, the U-1 measure, which includes only persons unemployed 15 weeks or longer as a percent of the civilian labor force, declined 0.8 percentage point nationally, compared to 0.1 percentage point in Louisiana. Conversely, over-the-year changes for the broadest measures of labor underutilization, U-5 and U-6, were greater for the state than those of the nation. For example, the annual average U-6 rate was down 1.5 points in Louisiana and 1.2 points nationwide.

State comparisons

Nevada registered the highest rates for five of the six measures of labor underutilization among the 50 states in 2012. Nevada’s rates ranged from a U-2 of 6.3 percent, the second highest among the states, to a U-6 of 20.3 percent. (See table 2.) Other states with high U-6 rates included California (19.3 percent), and Rhode Island (17.6 percent). Nevada, California, and Rhode Island also had the highest U-3 unemployment rates, averaging 11.0, 10.4, and 10.5 percent, respectively. States with high U-3 unemployment rates tended to have high values for the other five measures.

Similarly, states with low U-3 rates usually recorded low values for the other measures. North Dakota had the lowest rates for all six measures, including a U-6 of 6.1 percent, a U-3 of 3.2 percent, and a U-1 of 1.0 percent. Three other states, Oklahoma, Nebraska, and South Dakota, registered U-6 rates below 10.0 percent, at 9.6, 8.8, and 8.5 percent, respectively.

In 2012, Louisiana was among the 40 states and the District of Columbia where all six measures of underutilization decreased over the year. Nine states had U-6 rates that decreased by more than 2.0 percentage points from 2011 to 2012, led by Alabama (-2.7 points), and Nevada and South Carolina (each -2.4 points). Among these nine states, five were in the West and three in the South.

The U-6 rates rose in two states from 2011 to 2012. Delaware experienced the larger increase, up 0.7 percentage point to 13.9 percent. In New York, the U-6 rate increased 0.6 percentage point to 14.9 percent. The U-6 rate was unchanged in one state, Pennsylvania (13.9 percent).

Technical Note

The U.S. Bureau of Labor Statistics (BLS) produces six measures of labor underutilization based on Current Population Survey (CPS) data. Monthly, the BLS publishes these six measures for the United States in the Employment Situation news release. (See www.bls.gov/news.release/empsit.t15.htm). State estimates, presented as 4-quarter moving averages, are provided each quarter on the BLS Website. (For the most recent data see www.bls.gov/lau/stalt.htm.)

The civilian labor force is the sum of employed and unemployed persons. Those not classified as employed or unemployed are not in the labor force. The unemployment rate is the number unemployed as a percent of the labor force.

People are classified as employed if they did any work at all as paid employees during the reference week; worked in their own business, profession, or on their own farm; or worked without pay at least 15 hours in a family business or farm. People are also counted as employed if they were temporarily absent from their jobs because of illness, bad weather, vacation, labor-management disputes, or personal reasons.

People are classified as unemployed if they meet all of the following criteria: they had no employment during the reference week; they were available for work at that time; and they made specific efforts to find employment sometime during the 4-week period ending with the reference week. Persons laid off from a job and expecting recall need not be looking for work to be counted as unemployed. The unemployment data derived from the household survey in no way depend upon the eligibility for or receipt of unemployment insurance benefits. The official concept of unemployment (as measured in the CPS) is equivalent to the U-3 in the U-1 to U-6 range of measures. 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 updates these measures for each state on a 4-quarter moving-average basis.

The 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 measures may not fully reflect the current status of the labor market. For additional information on state estimates derived directly from the CPS, see www.bls.gov/gps/notescps.htm.

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.

Note that the unemployment rates (U-3) in this release are derived directly from the CPS, because this is the only source of data for the various components of the alternative 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 home page at www.bls.gov/lau/home.htm.

The level (that is, number of persons) estimates reflect independent population estimates for each year. Because these population controls are not revised, level estimates between years are not fully comparable. However, the application of new population controls generally does not affect ratios or proportions, such as U-1 through U-6.

Information in this release will be made available to sensory impaired individuals upon request. Voice phone: 202-691-5200; Federal Relay Service: 1-800-877-8339.

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