This monthly program provides labor force, resident employment and unemployment estimates, and unemployment rates for state and sub-state areas based on information obtained from a household survey known as the Current Population Survey (CPS). While the national unemployment rate is derived directly from data collected through this survey, sample sizes in each state are too small to provide reliable monthly estimates for the states directly. Therefore, all states including Rhode Island calculate their unemployment rates using statistical models developed by BLS. The models incorporate the number of jobs at businesses and current Unemployment Insurance claims data to refine the individual state estimates provided by the CPS survey.
The unemployment rate; which refers to the percentage of individuals in the labor force without a job, who are available for and actively seeking work; is the primary measurement of changes in labor underutilization. Unemployment rates are derived each month from the Current Population Survey (CPS). There are six alternative measures available through the CPS which provide narrower as well as broader definitions of labor underutilization. These alternative measures, which are referred to as U1 through U-6, are available on a quarterly basis and are based on the most recent four quarters of CPS data
These state unemployment averages which are derived solely from the CPS data are not strictly comparable to the official state average unemployment rates, which also incorporate establishment employment estimates, unemployment insurance claims data and historic trends. However, these alternative measures can provide insight into the volume of states’ discouraged populations and those working part-time for economic reasons.
The U-3 rate is the rate closest to the standard definition of unemployment - individuals in the labor force without a job, who are available for and actively seeking work - Rhode Island’s average unemployment rate for the four quarters ending June 2020 obtained directly from the CPS survey* was 6.2 percent.
Expanding this definition to include “discouraged workers” (U-4), individuals who want a job, but have given up looking for work because they believe there is no work available for them, would yield an unemployment rate of 6.3 percent, or one-tenth a percentage point higher (+0.1) than the standard definition. Prior to the recession, inclusion of this group would have yielded an unemployment rate two-tenths higher than the standard definition.
The inclusion of discouraged workers and those that are “marginally attached” (U-5), individuals who want a job, are currently available for work, but have not looked in the past twelve months for a variety of reasons other than discouragement, yields an unemployment rate of 6.9 percent or 0.7 of a percentage point higher than the standard definition. Prior to the recession, marginally attached workers represented eight-tenths of a percentage point (0.8) of the labor force.
The broadest measure of unemployment (U-6), which includes discouraged workers, marginally attached workers and those working part-time for economic reasons, yields an unemployment rate of 10.6 percent, 4.4 percentage points higher than the rate calculated using the official definition, with most of the increase (+3.7 percentage points) associated with the involuntary part-time worker. Prior to the recession involuntary part-time workers represented 2.7 percent of the labor force.
U3 -total unemployed persons as a percentage of the civilian labor force
U4 -total unemployed persons plus discouraged workers as a percentage of the civilian labor force plus discouraged workers
U5 -total unemployed persons plus discouraged workers plus all other marginally attached workers as a percentage of the civilian labor force.
U6 -total unemployed persons plus discouraged workers, other marginally attached workers, and all those employed part-time for economic reasons, as a percentage of the civilian labor force.
*Rhode Island’s official state average unemployment rate for this period was 6.5 percent
This list will remain in effect until September 30, 2020. Employers located in the labor surplus area may be given preference in bidding on federal procurement contracts. The purpose in providing such preference is to help direct the government’s procurement dollars into areas where people are in the most severe economic need based on their high unemployment rates.
Classification of Labor Surplus Areas
In order to be classified as a labor surplus area, a civil jurisdiction must have had an unemployment rate during the previous two calendar years (January 2017-December 2018) which was at least 20 percent above the national average unemployment rate for the same two year reference period. A floor of 6.0 percent is used during periods of low national unemployment in order for an area to qualify as a labor surplus area. The 6.0 percent floor comes into effect whenever the average unemployment rate for all states during the two-year reference period was 5.0 percent or less.
The national average unemployment rate during the period of January 2017 through December 2018 was 4.34 percent. Twenty percent higher than the national unemployment rate is 5.21 percent. Since 5.21 is below the floor unemployment rate of 6.00 percent, a civil jurisdiction must have a two-year unemployment rate of 6.00 in order to be classified as a labor surplus area.