Friday’s headline U3 unemployment rate of 6.7% for December is probably an undercount of the number of out-of-work people in the United States, not by design, but because of the peculiar circumstances of the pandemic.
If one adjusts the estimate to account for these circumstances, the unemployment rate would be substantially higher — 8.1% at a minimum.
Even under the best of circumstances, in which all employees on temporary layoffs are re-employed, the unemployment rate remains at 6.6%, which is only slightly better than the current U3 unemployment rate.
This suggests that the 135,000-job upward revision in October and November payrolls, which were followed by December’s decrease of 140,000 jobs according to the report released Friday by the Bureau of Labor Statistics, should be tempered by the enormity of the task of restoring the labor force back to normal.
For point of reference, the U6 unemployment rate was reported at 11.7% for December, slightly lower than the 12% rate in November. The U6 rate is commonly referred to as the underemployment rate and includes people who remain marginally attached to the labor force.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.