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Is joblessness 9.7% or 16.8%?

WAS THE JOBS RECOVERY SUSPENDED on account of bad weather?

The Bureau of Labor Statistics Friday reported a decline of 36,000 in nonfarm payroll employment for February and an unchanged unemployment rate of 9.7%. However, the BLS stipulated employment might have been hurt by February's snowstorms. That should mean workers furloughed for stormy reasons will return to payrolls this month, assuming milder weather persists.

Other releases last week confirmed that the economic recovery has neither failed nor faltered. The nonmanufacturing purchasing-managers index moved into solid growth territory for the month, rising 2.5 points to 53.0. While the February PMI slipped to 56.5 from 58.4, it stayed in the expansion zone, with the sub-index on manufacturing employment rising to the highest level since 2004.

The BLS employment release also showed a net upward revision to December and January of 35,000, almost perfectly offsetting February's decline. But for job growth to be statistically meaningful, we have to start seeing gains of at least 100,000. Wait 'til next month?

ONE WAY TO GET A CERTAIN kind of reader angry is to keep citing the official unemployment rate (U-3) of 9.7% and to mention only occasionally the broader measure of joblessness (U-6), at 16.8% last month. As a bleeding-heart capitalist myself, I regard these compassionate folks as kindred spirits. So they deserve some explanation.

U-3 tracks jobless individuals who have looked for work over the past month. U-6 adds to that number the "hidden unemployed," including people who would like to work but have become discouraged about their prospects, and part-time workers who would like to work full time. So why isn't U-6 the more realistic measure, especially in hard times like these?

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Written by GENE EPSTEIN for Barrons

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