Suppose that the BLS gathers the following data (purely hypothetical for illustrative purposes):
Labor force = 100
Unemployed = 10
Discouraged workers = 5
a. Calculate the official unemployment rate (called “U-3”).
b. Calculate the unemployment rate by including discouraged workers as unemployed and in the labor force (this is called “U-6”).
c. Which unemployment rate is larger?
(For thought: Which method of calculating the unemployment rate would politicians in the majority party emphasize? Which method of calculating the unemployment rate would politicians in the minority party emphasize?)