force ratio, or the percentage of the civilian labor
force that is employed. Thus, it is simply the comple-
ment of the familiar total unemployment rate. It
provides a measure of actual employment as a per-
centage of that part of the population which has
met the market test of working or actively seeking
work.

Despite the use of a more solid figure in the
numerator, the advantages of the employment-labor
force ratio over the unemployment rate are dubious.
The major public concern lies with trends in unem-
ployment. The reason that a series such as the jobless
rate is constructed in the first place is to focus on a
problem. This is similarly true for statistics on illness,
crime, poverty, and other areas. Thus, public atten-
tion has not been directed to the percent of people
in good health, of those who have escaped crime, or
of those who are above the poverty threshold. Rather,
attention is centered on the percent of persons who
are ill, who have been victims of crime, or who have
incomes below the poverty level. And such statistical
series are compiled to provide data for those con-
cerned with social or economic problems.

Although BLS receives occasional requests that
the employment-labor force ratio be featured in press
releases and public discussions, this measure has not
received widespread acceptance for use as an eco-
nomic or social indicator. The ratio itself is not
regularly published by the Bureau of Labor Sta-
tistics, but it can easily be calculated by subtracting
the unemployment rate from 100.

Employment-population ratio. Another employment
measure, and one which seems to be more useful
than the employment-labor force ratio, is the em-
ployment-population ratio. It is derived by dividing
the total civilian employment by the civilian non-
institutional population age 16 years and over.’ It
is a measure of employment as a percentage of the
population, which is the group that is available for
work in the broadest sense. This kind of measure
was suggested to BLS in March 1970 by Professor
Milton Friedman of the University of Chicago and
had been used by some labor market analysts during
the previous decade.‘ It has been published by the
BLS in Employment and Earnings on a quarterly
basis since April 1973. Monthly data are published
in that periodical for the total employment-popula-
tion ratio only, but the data needed to calculate the
major age—sex ratios are also published there. All of
these data are also published quarterly in the BLS

press release, Labor Force Developments. (See chart
2.)

For certain purposes of economic analysis, the
employment-population ratio may provide a better
measure of labor market conditions than either the
unemployment or employment rate, which use the
civilian labor force as the base. The reason is that
the labor force itself may expand or contract in
Tesponse to changes in the pace of economic activity,
in contrast to the greater stability of the population.

To the extent that persons leave the labor force
during an economic decline—that is, lose their jobs
and do not seek others—the reduction in employ-
ment will exceed the increase in unemployment.
Similarly, if there is a rapid growth in the labor
force during the expansionary phase of the business
cycle, employment will increase more than unem-
ployment will decline—that is, persons enter and
reenter the job market at the same time that many
job losers return to work. The potential expansion
and contraction of the labor force is illustrated by
the data which show that more than 10 million out
of a total of about 59 million persons not in the
labor force during the fourth quarter of 1975 worked
at some time during the preceding 12 months. Most
of those leaving the labor force were housewives and
students, who wanted only seasonal or other tem-
porary work, and older persons who retired or left
because of disability. About 700,000 workers were
squeezed out because of slack in the economy; about
two-thirds of them were women.

Further perspective on the potential expansion of
the labor supply is provided by the data on dis-
couraged workers. In the fourth quarter of 1975,
about 1 million persons reported that they wanted
jobs but did not seek them because of discourage-
ment over job prospects. Two-thirds of this group
were women. A larger group, 4.3 million persons,
reported that they wanted jobs but did not look for
them for a variety of reasons, such as school attend-
ance, family responsibilities, or illness. Some of these
nonparticipants might be drawn into the labor force
if jobs suddenly became readily available, even at
a relatively low wage. These groups not in the labor
force represent a reserve which could substantially
shift the size of the labor force under changing eco-
nomic conditions—for example, in the event of a
Federal job guarantee program or the elimination
or reduction of the Federal minimum wage for teen-
agers.

The behavior of the labor force in the current

7


MONTHLY LABOR REVIEW February 1976/The Doughnut or the Hole?

it leads at peaks and lags at troughs is borne in
mind, it can be put to good use in cyclical analysis.

The unemployment rate and the employment-
population ratio must both receive high ratings as
measures of performance (along with real GNP and
the Consumer Price Index). With this standard in
mind, it should be noted that the unemployment rate
reached a very high level over the course of the most
recent business cycle and attained a postwar record
during the 1974-75 recession. While the employ-
ment-population ratio showed a sharp- drop during
the recent recession, it had also indicated prior to
the downturn that a slightly larger percentage of the
U.S. population has been working during the past 5
years or so—the most current complete cycle—than
in previous postwar cycles. (See table 2 and chart 2.)
Further, the average for the full 1970-75 business
cycle is higher than for any previous business cycle.
Thus, in terms of the goal of promoting maximum
employment, the employment-population ratio would

ACKNOWLEDGMENT: The author is heavily indebted for
advice and assistance to Robert L. Stein, John E. Bregger,
Myrtle Nelson, and John F. Stinson, all of the Bureau of
Labor Statistics.

*See, for example, the remarks by former Commissioner
of Labor Statistics Geoffrey H. Moore in “A Measuring
Stick of Employment,” The Wall Street Journal, May 9,
1975; in “On the Reliability of Employment Figures,” a
letter to the editor of The Washington Post, July 25, 1975;
and in “The Numbers Aren't Everything,” The New York
Times, Oct. 2, 1975. See also the analysis by Irwin L.
Kellner, vice president and economist of the Manufacturers
Hanover Trust Co., “Counting the Employed, not the Un-
employed,” The New York Times, Oct. 26, 1975.

* An array of unemployment indicators similar to the
M-1 through M-7 series used by the Federal Reserve to
describe successively more comprehensive definitions of the
money supply was suggested to the author by Dr. Otto
Orenstein of the Hawaiian Telephone Co. in Honolulu. The
selection of series U-1 through U-7 included in the list was
made by the BLS. While this list uses symbols for the unem-
ployment series analogous to those used by the Federal Re-
serve, with each higher numbered series representing a
slightly higher level of unemployment, it does not have the
elegant property of representing successively broader defi-

10

-FOOTNOTES-

appear to give a higher rating with respect to the
performance of the American economy during the
1970’s than the unemployment rate.

How can these apparently contradictory trends be
explained? The answer appears to be that there are
changes in the labor force participation rate—a
greater percentage of the population wants to work
than in the past. Thus, a greater percentage of the
population is in the labor force, both as employed
and also as unemployed.

For the present, we can say that the employment-
population ratio and the unemployment rate are both
useful cyclical indicators, though neither ranks among
the very best. However, both measures rank close to
the top as measures of performance. Both illuminate
different aspects of labor market conditions, and both
are necessary for a balanced view of the overall em-
ployment situation. Thus, I would say the answer
to the question, “the doughnut or the hole?” is the
doughnut and the hole. o

nitions of unemployment compiled by adding groups at
each higher level.

°The Bureau of Labor Statistics excludes the Armed
Forces figures from both the employment and population
series. However, the data regularly published in Employ-
ment and Earnings enable analysts to compute an employ-
ment-population ratio in which the Armed Forces are in-
cluded in the employment total as well as in the population
figure if they so desire.

“A letter to Commissioner of Labor Statistics Geoffrey
H. Moore from Professor Milton Friedman of the Univer-
sity of Chicago, dated Mar. 9, 1970. There were numerous
earlier uses of the employment-population ratio. For ex-
ample, see T. Dernburg and K. Strand, “Hidden Unemploy-
ment, 1953-62,” American Economic Review, March 1966,
pp. 71-95; Jacob Mincer, “Labor-Force Part
Unemployment: A Review of Recent Evidence,’
A. Gordon and Margaret S. Gordon, eds., Prosperity and
Unemployment (New York, John Wiley & Sons, 1966),
ch. 3; K. Strand and T. Dernburg, “Cyclical Variation in
Civilian Labor Force Participation,” Review of Economics
and Statistics, November 1964, pp. 378-91; Alfred Tella,
“The Relation of Labor Force to Employment,” Industrial
and Labor Relations Review, April 1964, pp. 454-69; and
Alfred Tella, “Labor Force Sensitivity to Employment by
Age, Sex,” Industrial Relations, February 1965, pp. 69-83.



MONTHLY LABOR REVIEW February 1976/The Doughnut or the Hole?

As can be seen from the foregoing discussion, the
data available from the BLS allow interested persons
to construct unemployment series that range from
those using very narrow definitions of unemployment
to those based on extremely broad criteria. The series
selected depends largely on the particular use to
which one wishes to put the data, and on the atti-
tudes held concerning the nature and severity of un-
employment.

In table 1, the 1974 and 1975 annual average
values for each of the series U-1 through U-7 are
shown along with the values for the cyclical high and
low months of the recent recession. In 1975, as the
table indicates, the series ranged from a low value of
2.7 for series U-1 to a high of 11.5 for series U-7.

Each of the series is also plotted on chart 1 on
a quarterly basis from 1953, or the first year the
data for a particular series are available, through the
fourth quarter of 1975. The chart clearly illustrates
the successively higher percentages of unemployment
reflected by each of the series.

Measures of employment

We now turn to the employment statistics, to con-
sider two alternative employment measures and the
information that they provide for economic analysis
and interpretation.

First, it should be pointed out that the employ-
ment figures have numerous statistical advantages
over the unemployment figures.

Under the survey procedures, every person 16
years or over in the civilian noninstitutional popula-
tion is classified as employed, unemployed, or not in
the labor force. With few exceptions, a person who
during the survey week did any work at all for which
he or she was paid is considered to be employed.
Persons are unemployed if they did not work at all
during the survey week, were available for work, and
actively tried to find work during the past 4 weeks.
All others are classified as not in the labor force.

Employment, therefore, is a firmer and more ob-
jective concept than unemployment; consequently,
it is easier to define and measure. In measuring un-
employment, uncertainties can arise, such as in the
determination of whether jobless persons are actively
seeking work or whether they are currently available
for work. The identification of employment, on the
other hand, is relatively straightforward.

Next, employment, a much larger figure than un-
employment, is subject to a relatively smaller meas-
urement error. To illustrate, in the fourth quarter of

6

1975 there were 85.4 million employed and 7.8
million unemployed.

Additionally, the seasonal adjustment of employ-
ment is more accurate than that of unemployment.
The reason is that seasonal changes in total employ-
ment are relatively small, as are changes in the level
from one period to another. In contrast, unemploy-
ment is subject to large seasonal swings as well as
dramatic changes in level over short periods of time.
As a result, the multiplicative seasonal adjustment
method, which BLS uses and which has almost al-
ways worked well for economic series, introduces
distortions into the seasonally adjusted unemploy-
ment series when the level changes dramatically.
There are no similar problems in adjusting the em-
ployment series.

The employment series is not without statistical
and definitional problems, however. Some analysts
believe allowances should be made for part-time
workers, underutilized workers, and workers with
earnings below the poverty threshold.

Employment-labor force ratio. The first employment
measure to be considered is the employment-labor

chert.
Unemployment indicators, 1953 through 1975

1953 1959 1965, 1970 1975

NOTE: Trend lines do not reflect recent revisions in besic data,



MONTHLY LABOR REVIEW Febmary 1976/The Doughnut or the Hole?

recovery appears to be somewhat different from that
of earlier recoveries. In the past, the labor force has
grown very little during the first 9 months or so of
cyclical recoveries. During the first 9 months of the
current recovery (dating from March 1975), labor
force growth has been substantial—1.2 million,
compared with the median path of virtually no
growth in prior recessions. There are several plausi-
ble explanations for the larger than usual cyclical
growth in the labor force during 1975. According
to one theory, it reflects the changing role of women
in society; in fact, adult women have accounted for
about half the above-normal cyclical growth this
year. Another hypothesis is that the combination of
inflation and unemployment has put severe financial
pressure on many families and induced an unusually
large number of family members to seek jobs. Still
a third possible reason advanced is that some people
who otherwise might have left the labor force may
be staying in because of the extension of unemploy-
ment insurance benefits. Eligibility for these payments
requires the beneficiary to be seeking work. In any
case, and for various reasons, we have seen an un-
usual cyclical growth in the labor force during the
recovery in 1975.

Thus, while the unemployment rate is potentially
subject to wide variations as a result of special de-
velopments leading to growth or contraction in the
labor force, the employment-population ratio in-
cludes a more stable base for a measure of labor
market activity, one that is undisturbed by the shifts
of workers into or out of this labor force.

There are measurement problems in estimating
monthly population totals, but these are relatively
minor, especially for age groups 16 years and over.
A more serious problem is that there are no com-
parable population figures upon which to base
trends in full- or part-time jobs, as well as in em-
ployment by occupation or industry.

Since about 1948, the employment-population
ratio appears to have held about steady, except for
a slight upward tilt from 1970 to 1974. (See chart
2.) However, this overall trend masks important
changes in the age-sex composition of the ratio over
this period. The ratio for adult men has trended
gradually downward, primarily in line with increas-
ingly early retirement. On the other hand, there has
been a pronounced secular increase in the ratio for
adult women over this period. Teenagers showed a
dual pattern over the period, as their ratio declined
between 1948 and 1964 and rose in the subsequent
decade. Trends in an aggregate, made up of com-

8

ponents which are moving in different directions, are
difficult to interpret. Furthermore, aggregate employ-
ment is a simplistic measure which does not take
into account variations in skills, earnings, and hours
of work. Hours of work may be especially impor-
tant in this context in view of the increasing propor-
tion of part-time workers in the labor force over
the last two decades. A more sophisticated measure,
taking such factors into account, might reveal a
different trend.

Like other economic indicators, the employment-
population ratio should be used in conjunction with
the broad range of indicators of labor market activ-
ity currently available in order to develop a balanced
and accurate picture of actual labor market condi-
tions. It should be noted, for example, that an ex-
pansion in the labor force could result in an in-
crease in both the employment-population ratio and
the unemployment rate. The two measures, exam-
ined together, can be more revealing of underlying
labor market developments than can either measure
by itself.

It is important, as it is in assessing any economic

Chart 2.

Employment-population ratio by age and
sex, seasonally adjusted, 1948-75

Ratio
90

Adult men.

70

60
Total, atl workers:

PRINS ON rn gem

50
Teenagers

Adult women

1948 1954 1961 1968 1975



Employment and unemployment:
the doughnut or the hole?

A discussion of the relative merits
of various types of employment and
unemployment rates as measures of
the economy’s performance and as
cyclical indicators

JULIUS SHISKIN

The Employment Act of 1946, one of the landmark
pieces of legislation in the history of our country,
specifically provides that “. . . it is the continuing
policy and responsibility of the Federal Government
to use all practicable means . . . for creating and
maintaining . . . conditions under which there will
be afforded useful employment opportunities . . .
for those able, willing, and seeking to work, and to
promote maximum employment, production, and
purchasing power.” Among these goals, the one
which has probably received the greatest attention
over the three decades since the passage of this legis-
lation is that of maintaining maximum employment.
This attention has been magnified in the past year
as unemployment rose to record levels last spring
before showing some improvement in recent months.

The recent recession has also heightened public
awareness of the fact that, while there has been wide-
spread agreement on the need for full employment,
there has been little agreement on just what full em-
ployment is, how unemployment should be defined,
or on what specific data should be used in judging

Julius Shiskin is Commissioner of Labor Statistics. An
earlier version of this article was the basis of Mr. Shiskin’s
speech to the Metropolitan Economic Association in New
York City on Dec. 11, 1975.

the performance of the economy. There is even dis-
agreement on whether the focus should be on the
employment or unemployment statistics. The media
—as well as the professional literature—have focused
mostly on unemployment. This has led analysts who
believe the emphasis should be placed on employ-
ment to entitle the debate as “the doughnut or the
hole?” *

More specifically, it is the problem of measuring
employment (the doughnut) and unemployment (the
hole)—and the use of these measures in assessing
economic performance—with which this article is
concerned. Unemployment and the problems asso-
ciated with its measurement are discussed first, be-
cause this area has received the most attention over
the years; a discussion of measures of employment,
which has recently received more intensive study and
analysis, follows.

Measures of unemployment

While both the developers and users of labor force
statistics agree that no single unemployment measure
can serve all the purposes for which such data are
needed, there is much diversity of opinion about the
most appropriate overall measure. The reason is that
the unemployment figures are used by many persons
for different purposes. Many use them to assess cur-

3


indicator, to be wary of using one number without
any breakdowns, as has been done by some advocates
of the employment-population ratio. The BLS has
repeatedly stressed in the analysis of its unemploy-
ment statistics the importance of using the wide
range of detail available in order to make a sound
judgment of what the underlying economic condi-
tions are. It is equally important that this be done
with the employment-population ratio. Finally, it is
important to continue research into the historical
and current behavior of this ratio and its many com-
ponents. The Bureau of Labor Statistics will try to
{do further research on this subject, within the limits
of our research resources, and we encourage others
outside the Bureau to do further work in this area
as well.

Ratio and unemployment rate compared

It is useful to distinguish between a “cyclical
indicator” and a “measure of performance,” as al-
ready noted in the opening section on unemployment.
A cyclical indicator shows what stage of the
business cycle the economy is in or what stage it is
likely to be in sooa: Thus, “coincident” indicators
describe the current cyclical stage, and “leading”
indicators, the stage that is likely to be reached in
the period immediately ahead. The classification of
economic indicators according to the sequence in
which they move over the business cycle can be car-
ried out in a reasonably objective way. On the other
hand, measures of performance of the American
economy reflect value judgments on the goals of
economic policy—for example, high employment (or
low unemployment) and stable prices. The distinc-
tion between cyclical indicators and measures of per-
formance is emphasized by the fact that neither the
unemployment rate nor the Consumer Price Index,
two principal measures of economic performance,
are included in the new National Bureau of Eco-
nomic Research (NBER) short list of cyclical indi-
cators. (It is also to be noted that the new NBER
short list omits real gross national product (GNP),
the most comprehensive measure of economic output
and one of the most important measures of economic
performance, because it is not available monthly.)

In its assessment of cyclical indicators, the NBER
has devised a method of assigning to them numerical
scores, or weights, ranging from 0 to 100. The
scoring plan covers six major elements: economic
significance, statistical adequacy, historical conform-
ity to business cycles, cyclical timing record, smooth-
ness, and promptness of publication. The ratings

throw into clearer perspective the characteristic be-
havior and limitations of each indicator as a tool in
short-term economic forecasting.

When the employment-population ratio is tested
by these standards, it comes out with a score of 76,
compared with 87 scored by the top cyclical indi-
cator, nonagricultural payroll employment. The
principal reason for its lower score is that the
employment-population ratio has a poor cyclical
timing record at business cycle peaks. Consequently,
the employment-population ratio could not be classi-
fied as leading, coincident, or lagging at business
cycle peaks, and it lagged at business cycle troughs.
In addition, this series is fairly erratic over the short-
run and, therefore, receives a relatively low score
for smoothness. For these reasons, the employment-
population ratio did not qualify for inclusion on the
NBER short list of cyclical indicators. The total un-
employment rate received a slightly higher score—
78—but did not qualify for the new short list because
of differential timing at peaks (led) and at troughs
(lagged). While neither the unemployment rate nor
the employment-population ratio was selected for
the new NBER short list, they both scored fairly
high. The unemployment rate, in particular, must
be rated as a good cyclical indicator. If the fact that

Table 2. Cyclical trends in the unemployment rate and
the employment-population ratio since 1945

Unemployment | Employment-population
rate ratio
Business cycle | Dura Cycll- | Cycll- Cycll- | Cycit-
dates tlon | Cycit-| cal | cat | cycti-| cat | cal
(trough totrough)|(months)| cal | high | tow | cal | high | tow
aver aver-
age |-————] age
@-month (3-month
average) average)
O) ®l@aloa};loa!]@o]a)
October 1945-
October 1949...) 48 | 4.7 | 7.0 | @ | 56.1 | 56.9 | 55.3
October 1949-
‘August 1954. s | 4.0] 5.9 | 25 | 56.7 | 57.9 | 55.1
‘August 1954—
April1958......[ 46 | 4.6 | 7.4 | 3.8 | 56.8 | 57.7 | 55.3
April 1958-
February 1961...| 34 | 5.9 | 7.0 | 5.1 | 55.9 | 56.4 | 55.2
February 1961~
November 1970..| 117 | 4.7 | 6.0 | 3.4 | 56.5 | 58.0 | 56.5
November 1970-
March 1975.....| 52 | 5.6 | 89 | 4.7 | 57.2 | 58.1 | 55.9

1 Data are not available prior to January 1948; therefore, averages are computed

vail
for the period January 1948 to October 1949.
? Not available.

h and low dates used to compute the values shown in cols. (4), (5),
hose for the specific series rather than th i
by National Bureau of Economi



MONTHLY LABOR REVIEW February 1976/The Doughnut or the Hole?

rent conditions and short-term prospects, that is, as
a cyclical indicator. Others use the data as a measure
of how well the economy relieves the economic and
psychological hardships experienced by jobseekers.
But judgments as to what constitutes hardship arising
from unemployment vary greatly among different
political, social, and economic groups. Some view
economic hardship in terms of the three basic ele-
ments of food, clothing, and shelter; others consider
it in terms of relative standing in the income distri-
bution, with all persons who fall in, say, the lowest
one-fifth of the range classified as experiencing eco-
nomic hardship. Still others consider those unem-
ployed with adequate income from sources other
than employment to be experiencing psychological
hardship if they cannot find a job and, therefore, are
denied an opportunity for a fuller life in some sense.
Further, many believe long spells of unemployment
for teenagers to be especially damaging to their de-
velopment as responsible members of society.

This problem should also be approached from the
viewpoint of economists, who are concerned with the
overall performance of our economy in achieving
vigorous economic growth. Looked at in this way,
a measure which is geared strictly to economic hard-
ship will necessarily be too narrowly based to give
a good picture of the total, immediately available
labor supply. Conversely, a measure which attempts
to reflect the sum total of the underutilization of all
potential manpower resources will undoubtedly in-
clude many persons with fairly comfortable levels of
living.

Thus, no single way of measuring unemployment

can satisfy all analytical or ideological interests. To
meet the multiple needs of data users, the Bureau
of Labor Statistics regularly publishes a wide variety
of unemployment rates and indicators in its Employ-
ment Situation press release and the monthly publi-
cation, Employment and Earnings. It also publishes
separate data on persons involuntarily working less
than full time and on discouraged workers, which
can be added to the figures on the unemployed by
those who wish to do so. In general, it can be said
that these published statistics are not specifically
designed to measure economic hardship, but rather
derive from an activity concept in which persons
working are considered to be employed, persons
looking for work are unemployed, and persons doing
neither are not in the labor force at all. Finally, a
distinction must be made between the use of the
various unemployment series as cyclical indicators
and as measures of the economy’s performance.
Table 1 presents a grouping of unemployment
indicators, or categories of the unemployed, identi-
fied by the symbols U1 through U-7, which carries
the process of presenting the unemployment sta-
tistics one step further. This relatively small array
of unemployment measures illustrates a range of
value judgments on the hardship that is experienced
by the unemployed, going from a very narrow to
a very broad view.” Others could, of course, make
their own selection of such indicators. The data com-
piled by the BLS make it possible to construct a
very large number of different measures of unem-
ployment. The ones presented here were chosen be-
cauge they are representative of differing bodies of

Table 1. Range of unemployment indicators reflecting value judgments about significance of unemployment, 1974-75
[Percent]
Annual averages Seasonally adjusted data
U-1 through U-7
October 1973 May 1975
‘1974 1975 (cyclical (cyclical
tow month) high month)
U-1—Persons unemployed 15 weeks or longer as a percent of total civilian labor force. Lo 2.7 09 27
U-2—Job losers as a percent of civilian labor force... ...... Kensacesonese: senses] 24 AT 17 5.1
U-3—Unemployed household heads as a percent of the household head labor force. We eer er | 3.3 58 27 6.1
U-4—Unemployed full-time job seekers as a percent of the full bor force (including those employed
part time for economic reasons)... = a - erate ee: 5.1 8.1 41 8.5
U-5—Total unemployed as a percent of civilian labor force (official measure). . 5.6 85 AT 8.9
U-6—Total full-time job seekers plus half part-time job seekers plus half total on part time for econom-
‘ic reasons as a percent of civilian labor force tess half part-time labor force... 6.9 10.3 5.9 10.9
U-7—Total full-time job seekers plus half part-time job seekers plus half total on part time for economic
teasons plus discouraged workers as ‘a percent of civilian labor force plus icicoeransy workers
Jess half of part-time tabor force La is 6.6 12.0

NOTE: Reflects recent revisions of basic data, including seasonal experience through December 1975.

4


opinion about the meaning and measurement of un-
employment; because they are meaningful and use-
ful measures in their own right; and because they
can generally be ranked along a scale from low to
high.

No approval or disapproval of the value judgments
implicit in the selection of these series is intended
here. All series are regularly published by the BLS
with the exception of U-6 and U-7, and in these
cases the components are published, so they can
easily be calculated by anyone who wishes to do so.

The first series, U-1, is the number of persons
unemployed 15 weeks or longer as a percent of the
civilian labor force. The rationale behind the selec-
tion of this series is the belief that unemployment is
a more severe problem when it has lasted long
enough to cause substantial financial hardship. The
assumption is that shorter periods can be handled
by unemployment compensation plus the use of
savings and, in some cases, assistance from other
family members.

The second series, U—2, is the number of persons
who lost their last jobs, taken as a percent of the
civilian labor force. The implication of this series
is that unemployment is more serious for experienced
workers, for whom the loss of a job leads to sig-
nificantly lower income. Here unemployment which
accompanies entry or reentry into the labor force
and voluntary job-leaving would appear to be con-
sidered an inevitable but less serious matter.

U-3 is the number of household heads unem-
ployed as a percent of all household heads in the
civilian labor force. In this case, it is assumed that
unemployment is more serious when it affects bread-
winners. Other jobseekers, secondary workers, would
presumably be supported by the heads of households
while seeking employment.

U-4 is the number of unemployed persons seeking
full-time jobs, as a percent of all those in the full-
time labor force (including those employed part time
for economic reasons). The assumption here is that
a measure which is limited to those unemployed who
are strongly attached to the labor force is more
meaningful than one which also includes more casual
and marginally attached workers. Unemployment is
likely to be more serious for full-time than for part-
time workers because the former are more likely to
be breadwinners, will lose more income through in-
ability to find work, and are more committed to the
labor force.

U-5 is the official, regularly published unemploy-

ment rate for all workers age 16 years and over.
This series represents the total number of persons
not working but available for and seeking work, as a
percent of the civilian labor force. It can be viewed
as the base series from which each of the other six
series discussed in this article is constructed through
the addition or subtraction of various labor force
and unemployment components. In a sense, this
series reflects a consensus among the many different
user groups; it involves no value judgments regarding
a person’s family or marital status, relative need for
work, or personal characteristics. It only requires
that jobseeking take place. It has had widespread
support from various study groups and was recom-
mended by the Committee to Appraise Employment
and Unemployment Statistics (Gordon Committee)
established by President Kennedy in 1961.

U-6 includes, as a percent of the labor force, the
number of unemployed persons seeking full-time
work, plus one-half of the number of unemployed
persons seeking part-time work and one-half of the
number of those involuntarily on part-time work
schedules but desiring full-time employment (with
the part-time labor force given only half weight).
The rationale behind this series is that involuntary
part-time workers should be counted as at least
partially unemployed, and their loss of working time
should be reflected in the overall measure. Similarly,
it is felt that unemployed persons seeking only part-
time work should be given only half weight because
their employed counterparts—those employed part
time voluntarily—work about half a full-time work-
week; the voluntary part-time employed are also
given half weight. (This indicator is comparable to
the “percent of labor force time lost” series, which is
regularly published.

The final series, U-7, is the same as U-6 except
that the number of discouraged workers is added to
both the unemployed and labor force components.
This series is based on the idea that the situation of
discouraged workers is essentially the same as that
of the unemployed—they are jobless, want work,
and presumably are available for work. The only
difference is that they are not looking for jobs be-
cause they believe no work is available for them. It
should be noted, however, that specific information
regarding their work history and prior job-search
activity is not now collected, and many of them
could be reflecting only a casual interest in entering
the labor market or maintaining an unrealistic desire
for a prestigious job paying a high salary.