U.S. jobless rate misses "hidden" unemployed - economy recovering

Buried inside the official U.S. employment report each month is a little-known figure that gives a much less rosy picture of the labor market than the headlines, according to Reuters. The government agency that produces the data also publishes an alternative measure that tries to capture the hidden unemployed, those who are not included in the official unemployment rate for various statistical reasons. That broader measure is dramatically higher, at 9.7 percent in May, compared with the official level of 5.6 percent. That's an extra 5.96 million people, in addition to the 8.2 million "officially" unemployed. These are workers who have not actively looked for work in the past four weeks, including "discouraged workers" who have given up altogether.
Although it receives little notice, the adjusted jobless rate has important implications for Federal Reserve policy-makers because it suggests the job market will not tighten as quickly as some in the financial markets believe. It shows there is more slack in the labor market than appears on the surface. Fed Chairman Alan Greenspan is widely expected to start raising interest rates later this month, as the economy recovers from the 2001 recession and job creation picks up. Employers in California surprisingly added jobs in May for a third straight month, a milestone that hadn't been achieved in more than three years.