US Unemployment Hits 5.5%: Comparison With Previous Unemployment Highs

BBC News reported recently that unemployment rates in the US jumped from 5% to 5.5% in May 2008 for the fastest increase in more than 20 years. Whether you believe we’re in a recession or thinkg it’s a bunch of hooey, that is hard to ignore.

Honestly, I don’t have a good sense of what that means because I don’t know what a normal rate of unemployment is. I do understand that unemployment rate is calculated by dividing the number of unemployed workers by the total number of workers in a given country, but I don’t know exactly how that’s calculated. Do they factor in parents who choose to stay home with a child? Recent college graduates? Those disabled due to illness or injury? It would make sense to leave those folks out of the total, but since I doubt individuals are reporting life changes to the government the moment they happen, I suspect the numbers may not tell the whole story.

I checked out the Wikipedia entry on Unemployment, and here’s what I found about the US Bureau of Labor Statistics:

Bureau of Labor Statistics measures employment and unemployment (of those over 15 years of age) using two different labor force surveys conducted by the United States Census Bureau (within the United States Department of Commerce) and/or the Bureau of Labor Statistics (within the United States Department of Labor) that gather employment statistics monthly. The Current Population Survey (CPS), or "Household Survey", conducts a survey based on a sample of 60,000 households. This Survey measures the unemployment rate based on the ILO definition. The data is also used to calculate 5 other unemployment rates as a percentage of the labor force based on different definitions noted as U1 through U6:

• U1: Percentage of labor force unemployed 15 weeks or longer.
• U2: Percentage of labor force who lost jobs or completed temporary work.
• U3: Official unemployment rate per ILO definition.
• U4: U3 + "discouraged workers", or those who have stopped looking for work because current economic conditions makes them believe that no work is available for them.
• U5: U4 + other "marginally attached workers", or those who "would like" and are able to work, but have not looked for work recently.
• U6: U5 + Part time workers who want to work full time, but can not due to economic reasons.

After looking through US unemployment rates over 50+ years, I have to confess that 5.5% doesn’t seem that high to me. Check out these numbers…

Unemployment over the last 10 years (source):

• May 2007, 4.5% (see chart of states by unemployment rate in November 2007)
• May 2006, 4.7%
• May 2005, 5.1%
• May 2004, 5.6%
• May 2003, 6.1%
• May 2002, 5.8%
• May 2001, 4.3%
• May 2000, 4.0%
• May 1999, 4.2%
• May 1998, 4.4%

Highs and lows since 1948 (source):

• Lowest unemployment: May and June 1952, 2.5%
• Highest unemployment: November and December 1982: 10.8%

Average unemployment during the Great Depression (1929-1939), 25%

Are you concerned about unemployment? Do you worry about losing your job and not being able to find a new one? Do you think we need to get nervous? Share your opinion in the comments.

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