Tuesday, April 1, 2014

Labor Underutilization in Utah

by Jim Robson, Senior Economist

The official monthly seasonally adjusted unemployment rate for Utah in December 2013 was 4.1 percent of the labor force. To be unemployed and part of the labor force, a person must be available to take a job and have actively sought work in the past four weeks. The estimate of unemployment is based primarily on the monthly Current Population Survey (CPS) as the major input to a model that includes other indicators of the labor force for Utah. The CPS sample size is relatively small for state level estimates. By using a 12-month accumulation of CPS data, reliable estimates for Utah and other states can be made. In addition, averaging a full year of data eliminates seasonality issues.

Click graph to enlarge

The most comprehensive measure of labor underutilization that the U.S. Bureau of Labor Statistics (BLS) publishes is known as U-6 (the last of six labor utilization statistics). In addition to the officially unemployed (U-3), BLS adds marginally attached workers—those who are available for work and have looked for work during the past year but did not look for work in the most recent four weeks. To this are also added involuntary part-time workers—those who are working part-time but want full-time jobs. Figure 1 shows a comparison of this broad measure of labor underutilization, U-6, for Utah and the U.S. on an annual basis since 2003.

After the Great Recession, U-6 peaked in 2010 at 15.1 percent in Utah. It fell in the subsequent three years down to 9.7 percent in 2013. Figure 2 depicts U-6 by year broken down by the relative size of the 3 groups that comprise this measure—the unemployed, the marginally attached and the involuntary part-time. Note that the involuntary part-time percentage has stabilized in the last two years at the level of 4.4 percent. The changes in U-6 over the past three years illustrate the gradual economic recovery in Utah, with a stronger recovery in Utah than experienced on average for the country as a whole.

Click graph to enlarge

Figure 2 depicts U-6 by year broken down by the relative size of the 3 groups that comprise this measure—the unemployed, the marginally attached and the involuntary part-time. Note that the involuntary part-time percentage has stabilized in the last two years at the level of 4.4 percent. The changes in U-6 over the past three years illustrate the gradual economic recovery in Utah, with a stronger recovery in Utah than experienced on average for the country as a whole.

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