Fox Business host Stuart Varney reacted to a positive jobs report for the month of October by asking for a report on the “real unemployment rate,” which he claimed is “technically known as U-6.” But the economic indicator that Varney is referring to, known as U-6 is not an unemployment measure as it includes part-time workers who want full-time work.
On November 2, the Bureau of Labor Statistics (BLS) issued a report showing that in October, the unemployment rate rose slightly to 7.9%, but the economy added 171,000 jobs, including 184,000 in the private sector. In a special Fox & Friends segment, Varney responded to the positive report by asking Fox Business correspondent Peter Barnes to “look, please, at the real unemployment rate, I think it's technically known as U-6” :
But despite Fox's repeated claims that the U-6 is the “real unemployment rate,” it is not a substitute for the official unemployment rate.
A February 10 FactCheck.org post quoted BLS spokesman Gary Steinberg explaining that “the agency does not refer to U-6 as any kind of 'unemployment rate,' real or otherwise” :
Romney calls the U-6 number the “real unemployment rate,” but BLS spokesman Gary Steinberg said the agency does not refer to U-6 as any kind of “unemployment rate,” real or otherwise, because it includes people who are employed, albeit part-time. The U-3 figure is the “official unemployment rate,” Steinberg said, and has been calculated the same way for decades.
In a 2010 post for the conservative Heritage Foundation, research fellow Rea S. Hederman noted that the U-6 rate is often used for its “shock value” because the rate is consistently higher than the official unemployment rate:
The problem, however, is that this number is startlingly high only in relation to the levels of unemployment that the official unemployment rate -- the much more restrictive U-3 figure -- has accustomed us to seeing. The chief utility of the U-6 rate for anyone but labor economists, then, is often just its shock value.
For economists, these last two definitions of unemployment can help provide some insight into labor-market movements. In particular, the spread between U-5 and U-6 can show how quickly businesses are returning to normalcy after a recession, because it offers a way to gauge changes in the number of hours worked as well as in the number of workers hired. An increase in U-6, meanwhile, can provide evidence that employers are shifting more workers to part-time schedules in response to declining economic conditions. But beyond these limited assessments, the significance of the U-5 and U-6 numbers is far from clear -- and surely not as great as many commentators recklessly suggest.
Although Varney promoted the U-6 as the “real unemployment rate,” he failed to note that the rate decreased in the October report from 14.7% to 14.6%.