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The Big Crunch

Charts: What's the Real unemployment rate?

A help wanted sign in the window of the Unika store in Miami, Florida.
Getty Images
A help wanted sign in the window of the Unika store in Miami, Florida.

The Labor Department said Friday that the U.S. unemployment rate remained at 4.9 percent in February. But does that tell the whole story?

There's no one true unemployment rate. That 4.9 percent figure is the official rate used by the government, but the Labor Department calculates a number of figures to capture what's going on in the labor market. On jobs day, they release a lot of data, each of which says something different about the state of jobs and wages.

Most economists looks past the official rate (also known as the "U-3") to the U-6, which includes more unemployed workers.

While the U-3 rate is the "official" unemployment rate, it measures only those looking for a job as a percentage of the total labor force, so it leaves out large swaths of the non-working population.

The U-6 rate includes all unemployed as well as "persons marginally attached to the labor force, plus total employed part time for economic reasons," as a percentage of the labor force. So, the unemployed, the underemployed and the discouraged. That rate remains stubbornly above prerecession levels.

The U-6 rate fell to 9.7 percent in February. Overall, the U-6 has been more volatile than the U-3. It's down 1.3 percentage points over the past year, versus a 0.6-point drop in the U-3.

Despite the improvement that government statistics show, some economists think the real employment situation is much more dire. They point to the labor participation rate, which measures the portion of eligible Americans who are counted among the "employed" in calculating the unemployment rate.

The labor force participation rate rose from the 1960s to a peak in the late 1990s. It's been falling ever since, a fact that many economists attribute to changing demographics, particularly the retirement of the baby boom generation. A recent report from the White House predicted that the aging-related decline in the participation rate would continue in the short term.

The participation rate has shown little improvement in recent month. In February, that figure rose slightly from January to 62.9 percent.

The jobs report comes at a delicate time for Wall Street, as volatility in the markets calls into question nascent improvements in the economy at large. A trend of solid monthly job gains could convince the Federal Reserve to raise interest rates further in 2016.

Fed Chair Janet Yellen has said the committee is watching for improvements in economic data to decide a course forward.

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If the labor participation rate and wages rise at the same time, that's a good sign. It means workers who were previously sitting on the sidelines are getting active again, possibly inspired to look for work as they see improvement in the economy.

With increased competition for the qualified job candidates out there, employers need to offer more by way of benefits and wages, an area that's been of concern in recent months. Average hourly earnings rose to $25.35 in February; weekly wages were up to $872.04.

The nation added 242,000 jobs in February, beating expectations.