History

• Before the 1970s, the alternative U series of unemployment measurement did not exist, according to Steven Haugen, author of Measures of labor underutilization from the current population survey. The U-6 metric was invented by a former Commissioner of Labor Statistics named Julius Shiskin and was later adopted by the Bureau of Labor Statistics for inclusion in a monthly newsletter. By 1993, seven labor utilization statistics had been in regular use, but the seventh was dropped from use in government publications.
  
  

Methodology

• To determine the level U-6 unemployment rate, the U.S. Census Bureau interviews approximately 110,000 people each month. The current population survey measures unemployment using completed questionnaires in geographic areas called primary sampling units in all 50 states and the District of Columbia. Field agents conduct these surveys via electronic communications; surveys also represent multiple races, ages and gender in addition to varied professional fields and income levels.
  
  

Utilization

• Several important uses exist for the U-6 unemployment level. Although U-6 is not the official unemployment statistic of the U.S. Government, it is useful in measuring economic performance, evaluating use of unemployment insurance and in assessing public policy. For example, financial analysts and investors use the U-6 as an indicator of economic activity that affects consumer spending and corporate revenue. These variables often affect the price of financial securities such as stocks.
  
  

Advantages

• Advantages of the level U-6 unemployment are it provides more perspective for objectively understanding economic conditions. It is objective because the samples are random and rotated within a wide range of metropolitan and rural geographic areas that help optimize the accuracy and scope of collected data. Additionally, according to the "Journal of National Affairs," the U-6 underutilized labor statistic assists economists in determining how well businesses are emerging out of recession as measured by changes in hours worked and new employees hired.
  
  

Disadvantages

• A problem with the U-6 unemployment statistic is its sample base only allows estimates. Moreover, the Bureau of Labor Statistics claims changes in unemployment measurements of just 0.20 percentage points are only accurate to a 90 percent confidence level. The level U-6 measure also adds part-time or underemployed workers into the statistic and consequently overestimates unemployment in regard to this. Additionally, the definition of unemployment is narrowly defined by making the desire to work a requirement for the classification.