U 4Edit
U-4, short for the U-4 unemployment measure, is one of the family of labor-market indicators used in the United States to gauge slack in the economy. It extends the standard unemployment tally by including a category of workers who have given up looking for work, known as discouraged workers. In that sense, U-4 is a broader signal than the officially most-widely cited unemployment rate, and it sits within a spectrum that the Bureau of Labor Statistics (BLS) tracks alongside U-1 through U-6. unemployment in the United States Bureau of Labor Statistics Current Population Survey
Unlike a simple snapshot of people who are actively seeking work, U-4 aims to capture how many people are effectively on the sidelines of the labor market. This makes it a useful tool for assessing the degree of labor-market underutilization during tough economic times and for tracking how quickly the economy is absorbing workers who have become discouraged. Since discouraged workers are not counted as part of the civilian labor force, U-4 increases the sense of slack without requiring a separate, ad hoc definition of “hidden unemployment.” See also how U-4 relates to the broader measures U-3 and U-6 as part of the nation’s economic indicators. U-3 unemployment rate U-6 unemployment rate labor force discouraged workers
Definition and scope
U-4 is defined as the sum of unemployed people and discouraged workers, expressed as a percentage of the civilian labor force plus discouraged workers. In formula terms, this is typically described as:
U-4 = (U + D) / (LF + D)
where U is the number of unemployed, D is the number of discouraged workers, and LF is the civilian labor force. By construction, discouraged workers are those who are not currently looking for work because they believe no jobs are available for them. This classification keeps the measure tied to labor-market outcomes rather than to participation alone. For context, the official unemployment rate, U-3, counts only those actively seeking work, while U-6 includes a broader umbrella of underutilization, such as part-time workers who want full-time jobs. U-3 unemployment rate U-6 unemployment rate discouraged workers
The U-4 statistic is published by the Bureau of Labor Statistics as part of the monthly Employment Situation report, which draws on data from the Current Population Survey (CPS), a household survey. The CPS collects data on employment status, duration of unemployment, and other labor-market characteristics, enabling the construction of multiple measures of labor underutilization. employment situation Current Population Survey
Data sources, interpretation, and limitations
Data source: U-4 relies on the CPS, a survey of households that provides the basis for the main labor-market statistics in the United States. The CPS distinguishes between people who are employed, those who are unemployed, and those who are not in the labor force, including discouraged workers. Current Population Survey
Interpretation: Because discouraged workers are not in the labor force, adding them to the unemployed in the numerator and adding them to the denominator makes U-4 a broader gauge of labor-market slack than U-3. When the economy improves and discouraged workers re-enter the labor force or find jobs, U-4 can move differently than U-3, even if the headline unemployment rate falls. This is why policymakers and analysts look at multiple indicators in concert. employment indicators labor market analysis
Limitations: Critics note that U-4’s broader scope can make it slow to reflect rapid changes in job creation or job destruction, and that the measure can be influenced by shifts in labor-force participation. In practice, economists complement U-4 with U-3, U-6, and other metrics to get a fuller picture of how the labor market is performing. economic indicators
Uses in policy and economic interpretation
From a policy standpoint, U-4 is useful for gauging the presence and persistence of labor-market slack. A falling U-4 alongside rising participation can signal improving conditions, while a rising U-4 may indicate that the economy has more work to do to bring discouraged workers back into employment. Advocates of growth-oriented policy often emphasize jobs programs, investment in skills, and regulatory certainty as means to reduce discouraged workers and boost labor-force participation, arguing that these steps expand the pool of those willing and able to work.economic policy labor-force-participation
There is ongoing debate about how best to balance incentive structures with support for workers. Proponents of a pro-growth approach contend that creating durable, high-wrowth jobs is the most reliable path to lowering U-4 over time, while critics argue for targeted supports to ease transitions for long-term unemployed or structurally displaced workers. In this context, U-4 is one of several lenses through which analysts evaluate the effectiveness of fiscal and regulatory policy, training initiatives, and tax incentives aimed at employment. fiscal policy regulation job training
Controversies and debates
Controversy over measurement versus reality: Supporters of a low U-4 argue that it signals healthier demand for labor and suggests robust participation and wage growth are likely to follow. Critics, including some who point to persistent gaps in underrepresented communities, argue that any metric that includes discouraged workers can understate the severity of joblessness among those who want work but cannot find it. They say the metric can mask the true depth of underutilization if discouraged workers are slowly reabsorbed into the labor force without corresponding gains in job availability. unemployment in the United States labor-force-participation
The role of U-4 in policy prescriptions: Those favoring a growth-first policy often cite U-4 as evidence that unemployment alone is not the whole story, and that policies should aim to raise participation and opportunities for long-term unemployed. Critics of expansive welfare or extended benefit programs argue that such measures can blunt work incentives, potentially slowing the reduction of discouraged workers. Proponents counter that well-designed supports can help workers transition to new industries and occupations. The debate frequently intersects with broader discussions of tax policy, education, and regulatory reform. work incentives earned income tax credit education policy
Woke critiques and why some league-table arguments miss the point: Some commentators on the left critique unemployment measures as instruments of a broader social narrative about inequality. From a more market-oriented perspective, proponents of U-4 emphasize that the most important test is the creation of sustainable, higher-quality jobs and rising participation, rather than framing the issue around labels or identity-based metrics. They argue that focusing too much on statistical dualities risks losing sight of practical steps that expand opportunity for all workers, regardless of background. In this framing, the critique is seen as misguided if it distracts from evidence-based policy aimed at growth and opportunity. The key point for a responsible analysis is to use U-4 in concert with other indicators to chart real, tangible progress in the labor market. employment discrimination economic growth