U-6 Unemployment Rate

The U-6 unemployment rate is the broadest of the U.S. Bureau of Labor Statistics’ six alternative measures of labor underutilization. It includes the officially unemployed, all people marginally attached to the labor force, and employed people working part time for economic reasons. Its denominator is the civilian labor force plus the marginally attached.

U-6 is broader than the official U-3 unemployment rate, but it is not a count of every person who feels underemployed or has a job below their skill level.

Key Takeaways

• U-3 is the official unemployment rate; U-6 is a broader supplementary measure.
• Marginally attached people want and are available for work and searched within the prior 12 months, but not during the latest four weeks.
• Discouraged workers are a subset of the marginally attached, not an additional category to add again.
• Part time for economic reasons covers employed people who want and are available for full-time work but work part time for economic reasons.
• The U-6 denominator differs from U-3 because it adds marginally attached people to the labor force.

Formula

Where:

• U = total unemployed people;
• M = all people marginally attached to the labor force;
• P = employed people working part time for economic reasons; and
• L = civilian labor force.

Part-time workers appear in the numerator because U-6 measures labor underutilization, but they remain employed and are already included in the labor force denominator. Marginally attached people are outside the labor force under U-3, so U-6 adds them to its denominator.

Worked Example

Suppose a survey estimates:

• civilian labor force: 100 million;
• unemployed: 5 million;
• marginally attached: 2 million; and
• employed part time for economic reasons: 3 million.

The official unemployment rate is:

The broader rate is:

Do not divide by 105 million or add discouraged workers separately. The labor force already includes unemployed people, and discouraged workers are already within the marginally attached group.

U-3 vs. U-6

U-6 is normally higher because it covers more forms of underutilization. That does not make U-3 false or U-6 universally better. U-3 consistently measures active unemployment; U-6 answers a broader question about available labor that is not fully used.

How to Interpret U-6

Compare U-6 with its own history and with U-3. A widening gap may indicate that marginal attachment or involuntary part-time work is rising relative to official unemployment. A narrowing gap can indicate improvement in those broader categories, although changes in labor-force behavior and population composition still require review.

Check whether the data are seasonally adjusted and whether the comparison uses the same period. Survey estimates are subject to sampling error and revision. A small one-month change may not represent a meaningful shift.

What U-6 Does Not Measure

U-6 does not automatically include:

• full-time workers who believe their role is below their qualifications;
• workers who want a different occupation but do not meet a listed category;
• reduced earnings without part-time-for-economic-reasons status;
• job quality, benefits, scheduling stability, or productivity; or
• every person outside the labor force who wants work.

Calling all skill mismatch “U-6 underemployment” overstates the BLS definition. Use the published components rather than an informal meaning of underemployment.

Why It Matters in Finance

Broader labor underutilization can affect wage growth, household income, consumer demand, credit performance, and inflation pressure. A lender may use it as context for household repayment capacity, while an analyst may compare it with sales, margins, and hiring plans. Policymakers may assess U-6 alongside participation, payroll employment, vacancies, and wages.

U-6 alone does not determine monetary policy or predict market returns. It is educational evidence within a broader economic assessment.

Common Mistakes

• Describing U-6 as the “real” unemployment rate. It is a broader measure with a different question and denominator.
• Adding discouraged workers twice.
• Treating all part-time workers as underutilized; U-6 includes part time for economic reasons.
• Including skill mismatch that is not part of the published definition.
• Comparing U-6 directly with an international rate that uses different concepts.

Authoritative Sources

• U.S. Bureau of Labor Statistics: Current Population Survey Concepts and Definitions
• U.S. Bureau of Labor Statistics: Alternative Measures of Labor Underutilization

Related Terms

• Unemployment Rate: The official U-3 measure uses total unemployed divided by the civilian labor force.
• Labor Force Participation Rate: Helps show changes in labor-force entry and exit that U-3 may not reveal.
• Employment-to-Population Ratio: Measures employment against the covered population without requiring active job search.
• Natural Rate of Unemployment: A theoretical longer-run benchmark, not another published U-series rate.

FAQs