Whenever a breathless headline about Nevada’s U-3 or “headline” unemployment rate breaks, the RCG Economics team takes a deep breath and digs a little deeper.
The U-3 jobless rate is the one most commonly reported by the news media. It represents the total unemployed persons as a percent of the civilian labor force. In Nevada in June, the rate was a seasonally-adjusted 6.4%.
Sounds pretty good, in light of where we’ve been, right?
Yes – and no.
The U-6 unemployment rate – a fuller measure of unemployment that includes unemployed, marginally attached, and forced part-time workers – is the number most economists tend to watch most closely.
In Nevada in Q2 2016, the U-6 rate was 13.1%. This is a decline of 0.3 points from Q1, so there has been progress, but it still remains the nation’s highest.
Some economists say that all other factors aside, the U-6 rate should be roughly twice that of the U-3 rate. In Nevada, where the U-3 rate is 6.4%, an economist of that stripe would look for a U-6 rate of around 12.8%. Our rate is slightly higher than that, but not substantially so.
Other economists say that a U-6 rate of 7% to 8% would indicate a full jobs recovery, regardless of the headline rate. Our rate has a long way to go to reach that point.
Either way, the closer Nevada gets to a single-digit U-6 number, the better we can say our jobs market is doing. At the very least, we should look to match or beat the national U-6 number which in Q2 was 9.9%.
So, how is Nevada doing compared to other Mountain West states and the rest of the U.S.?
RCG’s latest post on our blog, Nevada by the Numbers, shows how Nevada’s U-6 rate looks in comparison to the rest of the nation as well as to other Mountain West states.
Below are three graphs we created for context (click each graph to enlarge).
Nevada’s U-6 rate ranks worst among states and is 3.2 percentage points lower than the U.S. average:
Nevada’s U-6 ranks last among the Mountain West states as well and is 5.8 percentage points lower than Colorado’s rate:
Finally, the below graph shows the percentage change in the U-6 rate by state between Q2 2015 and Q2 2016:
Nevada is in the top five in terms of the rate of improvement.
This is largely a function of how high the state’s U-6 rate remains and in that way is similar to the grade school award for “most improved.”