Unemployment has fallen a lot recently, but for a peculiar reason: not so much rising employment as a falling share of the population actively looking for work. This has sparked a debate over how much of the decline in labor force participation reflects a weak job market — why bother looking? — and how much demography, changing culture, and all that. And it looks like one of those debates that will go on, unresolved, for a long time — certainly past the point where a decisive win for one side or the other can inform policy.

Luckily, Jan Hatzius of Goldman Sachs makes a very good point: the headline unemployment rate is only one of several measures (it’s actually U3), and given our uncertainty about what’s going on it makes sense to also look at broader measures, notably U6, which counts discouraged and marginally attached workers. Normally all of the Us move in tandem, but lately, not so much.

Here’s my version: a scatterplot of U6 versus U3 since the U6 numbers became available in 1994, with data points up to June 2009 — the start of the official recovery — in blue, those after in red. The black line shows the average relationship before the current recovery.

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What you can see is that the two measures are telling different stories: U3 is considerably lower than you would have predicted using U6, and the labor market looks much worse using the broader measure.

My take on this is that at the very least you should look at both measures; it’s obvious from the figure that doing so would lead you to conclude that the economy still has a lot of slack, something confirmed by low inflation. This economy needs more, not less, stimulus.