Alternative Measures of Unemployment
Minnesota's official unemployment rate tells us a lot about the share of people in the labor force who have untapped potential to offer. But it doesn't tell the whole story. We can learn more by looking at race, age, and gender, and by looking beyond the traditional unemployment rate. Please note that all data below are presented as 12-month moving averages.
Unemployment by race or ethnicity
When we break out unemployment rates by race, we find that some communities face greater challenges than others. Black unemployment continues to fall and has reached 10.7 percent in May, the lowest rate since September 2014. May’s rate, however, is still more than three times the 2.9 percent rate of White unemployment. After rising for six months, Hispanic unemployment dipped to 4.9 percent in May from 5.0 percent in April.
Minnesota unemployment rates by race or ethnicity as of May 2016:
- Black or African American, 10.7 percent, compared to 14.4 percent 12 months ago
- Hispanic or Latino, 4.9 percent, compared to 4.3 percent 12 months ago
- White, 2.9 percent, compared to 2.9 percent 12 months ago
- All workers statewide, 3.7 percent, compared to 3.8 percent 12 months ago
Also see the American Community Survey for a broader selection of unemployment data by race or origin, including White, Black or African American, Hispanic or Latino, American Indian and Alaskan Native, Asian, and more. Population profiles for all available races are available for download here. Note that the American Community Survey data are collected and calculated by a method which differs from the Current Population Survey numbers shown above.
Unemployment by age and gender
We also find differences when we break out rates by age or gender. The unemployment rate for teens was 7.6 percent in May, continuing downward trend since early 2013. The unemployment rate for men, at 4.4 percent has risen slightly over the past three months. The rate for women, at 2.9 percent, continues to edge lower.
Minnesota unemployment rates by age and gender as of May 2016:
- Teens (age 16-19), 7.6 percent, compared to 10.2 percent 12 months ago
- Men, 4.4 percent, compared to 4.2 percent 12 months ago
- Women, 2.9 percent, compared to 3.4 percent 12 months ago
- Compared to all workers statewide at 3.7 percent in May and 3.8 percent 12 months ago
The long-term unemployed
Long-term unemployment—lasting 27 weeks or more—imposes costs on people that go well beyond lost wages. Future earnings are lower, and health, relationships, and self-esteem can suffer.
Minnesota long-term unemployment as of May 2016:
- Statewide number of long-term unemployed, 16,300 persons, compared to 27,000 persons 12 months ago
- Statewide long-term unemployed as a share of total unemployed (U-3), 14.7 percent, compared to 23.5 percent 12 months ago
It is important to note that the percentage of long-term unemployed persons represents a share of unemployed persons only, while other unemployment rates represent a share of the entire labor force which includes all persons age 16 or older who are working or looking for work.
Alternative measures of unemployment
We can learn still more about Minnesota's labor market by looking at alternative measures of unemployment defined by the U.S. Bureau of Labor Statistics.
Minnesota unemployment rates by alternative measures as of May 2016:
- U-3 Officially unemployed, 3.7 percent, compared to 3.8 percent 12 months ago
- U-4 Discouraged plus officially unemployed, 4.0 percent, compared to 4.1 percent 12 months ago
- U-5 Marginally attached plus discouraged and officially unemployed, 4.5 percent, compared to 4.8 percent 12 months ago
- U-6 Part-time underemployed plus marginally attached, discouraged, and officially unemployed, 7.9 percent, compared to 8.0 percent 12 months ago
- Part-time underemployed—a component of U- 6, including only persons working less than 35 hours per week who want, but cannot find, a full-time job—is 3.4 percent, compared to 3.2 percent 12 months ago
What do these measures mean?
The official unemployment measure, called U-3, is the share of the labor force aged 16 and over who, at the time of the monthly survey, have been unemployed for the past week and have looked for work sometime in the past four weeks.
But what about people who looked for work within the past twelve months but not in the past four weeks because they believed there were no jobs available that fit their qualifications? These marginally attached “discouraged workers” reveal additional untapped potential and are included in a broader measure called U-4.
And what if we add all the other marginally attached workers, people who looked for work sometime in the past twelve months but, for other reasons, did not look in the past four weeks? These other marginally attached workers expand the count still further in the U-5 measure.
And finally, U-6 includes all of the above and adds people who are employed part-time but want full-time work.
Falling unemployment and underemployment mean that Minnesota’s economy is running closer to its full potential than before. By looking at race, age, gender, and additional measures of unemployment, we can see where there is still more work to be done.
Notes on using Current Population Survey state data:
Data above are presented as 12-month moving averages. Each monthly data point is an average of that month and the previous 11 months. Twelve-month moving averages are calculated differently than the official estimates of unemployment and should not be compared directly. Learn more about using CPS subnational data at www.bls.gov/gps/notescps.htm.