Members propose new calculation to reflect 'true' unemployment rate

By Pete Kasperowicz - 02/05/13 01:49 PM ET

Rep. Duncan Hunter (R-Calif.) on Monday introduced legislation that would require the government to include people who have stopped looking for work in its headline unemployment calculation — a change that would significantly boost the official unemployment rate.

Under current law, the Bureau of Labor Statistics (BLS) uses the so-called "U-3" measure as the primary nationwide unemployment number. That calculation does not count people who want work but have stopped looking. But another, the "U-5" measure, does include those people, and thus reflects a higher unemployment level.

The Real Unemployment Calculation Act, H.R. 484, would simply require that the U-5 measure "shall be considered by the Federal Government as the primary measure of unemployment in the United States."

Hunter told The Hill that while his bill would increase the official unemployment rate, the country should have a complete picture of unemployment, since that number contributes so much to federal policymaking.

"We're only fooling ourselves by pretending the national unemployment rate is holding near 8 percent," Hunter said. "We need to be honest with ourselves and recognize that the real unemployment situation is much higher than what's officially reported each month."

BLS reported last week that the unemployment rate rose slightly to 7.9 percent in January, based on the U-3 measure. In a letter to House colleagues seeking support for the bill, Hunter acknowledged that his proposal would increase the official unemployment rate by more than one percentage point.

"When factoring in this group, the national unemployment rate increases from 7.9 to 9.3 percent, providing a much clearer representation of unemployment nationwide," he wrote. "The Bureau of Labor Statistics (BLS) already measures this statistic, and it is provided through the U-5 calculation.

"I hope you will join me in this effort to provide a true sense of the real unemployment situation."

Hunter's bill had 15 cosponsors as of Tuesday, including one Democrat, Rep. Michael Michaud (D-Maine).

Hunter proposed similar legislation last year that attracted more than two dozen members, but failed to advance in the House. A House aide said Hunter is pushing for a hearing on the bill at the Committee on Education and the Workforce.