Jobs number: What's the real unemployment rate

The unemployment rate is a huge part of the economy because it shows the percentage of unemployed workers in the economy. There are different metrics used to measure the unemployment rate and the one we are most familiar with is the U-3 rate which is 4.9%, the official unemployment rate. The problem with the U-3 rate is that it only measures for those who are unemployed and actively seeking employment. Another metric is the U-6 rate which is 9.7% and it measures those unemployed, underemployed and discouraged workers. If the unemployment rate is 4.9%, it is rather low and good for the economy because it is closer to achieving a full employment economy. On the other hand, if the unemployment rate is 9.7%, it is rather high and bad for the economy because it can lead to a recession.

In August, the unemployment rate is 4.9% which means the economy is increasing which lead the feds to increase interest rates. 180000 jobs were supposed to be added to the market by August but only 151000 jobs were added. Labour Force Participation rate remains 62.8%, shows that people are not looking for jobs. It is been falling since the recession. Wages are increasing and people are getting employed but for low-income jobs. All these information suggests that the official employment rate might be good but lacking a good amount of components that the U-6 rate portrays. If the economy crashes at this moment due to unemployment, people would question why it crashed even though the U.S. as a good unemployment rate and they would be referring to the U-3 rate while being unaware of the other metrics.

Link: http://www.cnbc.com/2016/09/02/jobs-number-whats-the-real-unemployment-rate.html