What Should We Make of Friday’s Jobs Data?

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On Friday morning, the Bureau of Labor Statistics reported that the American economy created 192,000 jobs in March, and that the unemployment rate held steady at 6.7 percent. If you look at some of the articles published in response to this data, you would have no idea what to make of it. Some indicate that this number was excellent (e.g., this article from the Miami Herald), and that it points to an improvement in the economy. Others, such as this report from Forbes, maintain that labor data remains weak.

The fact of the matter is that the unemployment rate as reported by the BLS tells us very little about individuals’ economic situations. Other data are more enlightening, but again, not very revealing. Here’s why.

First, the data don’t differentiate between the unemployment rate and the underemployment rate. Someone who is underemployed is employed at one job but who is qualified to do a more productive job. For instance, somebody with a chemistry degree working at McDonald’s because s/he cannot find work with a chemical manufacturer or a drug company is underemployed.

The BLS actually does look at this data, which can be found here.  The “official” data — that is, the number that appears in all of the headlines — is the seasonally adjusted U3 data. The number that measures the underemployment rate is the seasonally adjusted U6 data. This number actually ticked up one-tenth of a percent in March, to 12.7 percent.

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