First, lets look at how they are calculated
National employment indicators, such as the unemployment rate, get attention as we release them each month. In August 2018, the unemployment rate stood at 3.9 percent, the same as in July. The rate in May, 3.8 percent, was the lowest since 2000. In addition to reporting this headline number, the Bureau of Labor Statistics provides considerable detail about those who are employed – and those who are unemployed. Let’s explore.
But first, a reminder. The unemployment rate and details about the unemployed come from the monthly Current Population Survey, a survey of roughly 60,000 households. We collect information about household members age 16 and over. These individuals are counted as “employed” if they say they performed at least one hour of work “for pay or profit” during the reference week, the week including the 12th of the month. People are “unemployed” if they say that during the reference week they (1) had not worked; (2) were available for work; and (3) had actively looked for work (such as submitting a job application or attending a job interview) sometime during the 4-week period ending with the reference week.
Together, the employed and unemployed make up the “labor force.” The unemployment rate is the share of the labor force who are unemployed. Those who are neither employed nor unemployed are “not in the labor force.” This category includes students, retirees, stay-at-home parents, people with a disability, and others who are not working or actively looking for work.
We have more measures that help to provide a fuller picture of America’s labor force. These include people who work part time but would prefer to work full time. We also count people who have searched for work in the past 12 months but not in the past 4 weeks (and are therefore not counted as unemployed). Further, we count a subset of this group who are not looking because they do not believe work is available for them. People who fall into these categories are included in the alternative measures of labor underutilization, which we publish each month.
Second, lets look at the alternative numbers that they maintain, specifically the U-6 as compared to the U-3 number
Notice how the U-6 number is nearly double the U-3 number that the media quotes?
Perhaps you should think about that when somebody tells you that unemployment is low.