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U-6 underemployment rate

The broadest published measure of labour underutilisation, adding discouraged workers, others marginally attached to the workforce, and part-timers who want full-time work.

The headline unemployment-rate is U-3 and counts only people actively searching for work. U-6 adds those who have given up looking and those working part time for economic reasons, so it is typically several points higher.

The gap between U-6 and U-3 is the informative part. A widening gap while the headline rate is flat means slack is building beneath the surface, usually through cut hours before outright layoffs, which is the classic early sign of a cooling labour market.

Example: U-3 is 4.1% and U-6 is 7.8%, a 3.7 point gap against a long-run average near 3.4. Six months later U-3 is 4.2% but U-6 is 8.6%, so the deterioration is four times larger than the headline suggests.

Related: unemployment-rate, labour-force-participation, household-survey, jolts, sahm-rule

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