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Minnesota Legislature

Calculating unemployment (vetoed bill)

Published (5/29/2009)
By Nick Busse
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The U.S. unemployment rate reached 8.9 percent in April. But what if the real percentage were nearly twice that much?

In fact, it is, depending on what measures are used to calculate unemployment. According to the U.S. Bureau of Labor Statistics, the most comprehensive set of statistical measures available, put the actual unemployment rate at 15.8 percent.

Gov. Tim Pawlenty vetoed a bill that would have ensured that the state’s official unemployment estimates are always calculated using the more comprehensive method.

Sponsored by House Majority Leader Tony Sertich (DFL-Chisholm) and Sen. D. Scott Dibble (DFL-Mpls), the legislation would have asked the Department of Employment and Economic Development to use a method of calculation known as “U-6.”

The U-6 calculation takes into account people who are unemployed and no longer actively seeking work because of impediments like transportation issues or a lack of child care, and also those who are working part-time but who wish to work full-time. The state’s current method of calculation, known as U-3, does not include these measures.

Sertich said the new method would allow DEED, which produces the state’s official labor market information reports, to give lawmakers and others a clearer picture of the employment situation in Minnesota. The bill would have allowed up to $120,000 from funds collected for unemployment insurance administration to be used to implement the changes.

In his veto letter, the governor called the U-6 measure “relatively obscure.” He noted that only two other states use it, and that neither of them releases the information publicly, in part because they want to “avoid misleading comparisons with other states.”

HF925*/SF1368/CH135

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