Labor Underutilization On The Rise in Oregon
September 15, 2025In recent years the “Alternative Measures of Labor Underutilization” published by the U.S. Bureau of Labor Statistics have grown in popularity as statistics for identifying slack in the labor market. All six of these measures, including the official unemployment rate, have been on the rise in 2025.
The labor force consists of two parts: employed workers and the unemployed. The employed part of the labor force, which totaled 2.1 million Oregonians in July 2025, includes anyone 16 and older who lives in the state, is not active military or in an institution, and either works for an employer, is self-employed, or works on a farm.
The unemployed part of the labor force, which amounted to 110,000 in July 2025, includes individuals who are not working, but are able and available to work, and actively seeking work. People 16 and older who are neither employed nor unemployed are not considered part of the labor force. Around 1.3 million Oregonians fell into this category as of July.
Oregon’s unemployment rate – or the unemployed share of the labor force – was 5.0% in July 2025. That’s an increase from the record low of 3.4%, which Oregon reached in late 2019. The most recent low in Oregon’s unemployment rate was 3.6% in the spring of 2023. While a 5.0% unemployment rate wouldn’t be considered that high for Oregon in the longer term, it is relatively high for recent history. Outside of the pandemic recession and recovery, Oregon’s unemployment rate hasn’t been at or above 5.0% since early 2016.
While the unemployment rate serves as an important gauge of the labor market, it does not capture all of the economic situations of all Oregonians whose work capacity may not be fully utilized. To understand more fully, we can look at other measures of labor underutilization.
The official definition of unemployment used by Bureau of Labor Statistics (BLS) is all persons within the civilian noninstitutional population (CNP) who do not have a job, but are currently available for work and are actively searching for work. The CNP consists of all persons age 16 years and over, excluding those on active duty in the U.S. Armed Forces and the institutional population (e.g., prison inmates or those in homes for the aged). Unemployment is sometimes thought to include only those individuals who both qualify for and are receiving unemployment insurance benefits.
However, many outside this group are considered to be unemployed based on the official definition used by BLS. Examples include those who have exhausted unemployment benefits, new labor market entrants – including recent high school and college graduates – and those who are not covered by unemployment insurance, such as the formerly self-employed. These groups are considered unemployed as long as they are actively seeking work.
The official definition of unemployment also excludes certain groups who are sometimes thought of as being unemployed or “underemployed.” Those who would like to work and have actively searched for work sometime in the last 12 months – so-called marginally attached – and discouraged workers who’ve stopped looking for a job, are not counted in the official definition because they are not currently seeking work. People working part time who would prefer full-time work are also not counted as unemployed because they are working – albeit fewer hours than they would like. Finally, those who are not employed (i.e., did work for pay or profit) and do not fit the above definition of unemployed are classified as “not in the labor force.” This includes Oregonians who have retired, or who work at home caring for family members without pay, or forgo work for pay while pursuing their education, etc.
The “Alternative Measures of Labor Underutilization” published by the BLS, commonly identified by a “U” in front of a number from 1 to 6, provide both more narrowly (U-1 and U-2) and more broadly (U-4, U-5, and U-6) defined estimates of labor underutilization than the official unemployment rate (identified as U-3). The various measures range from very narrow to very broad definitions of “underutilization,” relative to the official definition of unemployment.
The narrowest measure, U-1, tracks the number of persons unemployed 15 weeks or longer as a percent of the civilian labor force. This measured reached an all-time high of 6.7% on the heels of the Great Recession. It had reached a record low of 1.1% before the Pandemic Recession occurred in 2020. The U-1 measure then rose to 3.9% in early 2021, following the Pandemic Recession. The percentage of the labor force staying unemployed longer than 15 weeks returned to a record low (1.1%) in the middle of 2023. Since then, it’s risen by more than a full percentage point, to 2.3% in July 2025.
The second measure, U-2, considers the number of people who lost their jobs or completed temporary jobs, as a percentage of the civilian labor force. The U-2 reached a record high of 10.9% in April 2020, the same month of record job losses in Oregon amid the Pandemic Recession. The U-2 measure then recovered to a record low of 1.5% from September 2023 to February 2024. The rate has since doubled to 3.0% as of July 2025.
The broader measures begin by adding discouraged workers to the unemployed. In the U-4 measure, discouraged workers are defined as those who want a job, are available for work, and have searched for work in the prior year; however, they are not currently looking for a job for reasons related to the job market. If these workers are added, the measure results in only a modest increase relative to the official rate (5.0%) to 5.2%. This measure also reached a record high in April 2020 of 13.9%.
Measure U-5 includes not only the unemployed and discouraged workers but all “marginally attached workers.” Marginally attached workers are defined as persons who are neither working nor currently looking for work but indicate that they want and are available for a job and have looked for a job sometime in the past year. This group includes those who are not currently looking for work for reasons such as lack of child care or transportation. The record low of 4.2% occurred just prior to the pandemic. The most recent low (4.5%) occurred in April 2023; the measure rose to 6.0% by July 2025.
Finally, the broadest measure of labor underutilization, U-6, includes all unemployed and marginally attached persons, but also those employed part time for economic reasons. This latter group provides an objective measure of a portion of the underemployed, or “involuntary part-time workers.” The BLS defines “part-time workers” as those who worked less than 35 hours during the reference week of the Current Population Survey. To be classified as employed part-time for economic reasons, an individual must also be working part time because of weak or slack business conditions, or an inability to find full-time work, and must want and be available for full-time work. Involuntary part-time employment does not capture all underemployed people, such as those whose education may qualify them for a more highly skilled position. However, underemployment by educational attainment can be both subjective and more difficult to quantify.
Using this broadest U-6 measure of labor underutilization, the U-6 reached its all-time high at 20.4% in April 2020, and hit a record low at 7.1% in 2022. Oregon had 9.3% of the civilian labor force plus the marginally attached that was either unemployed, marginally attached to the labor force, or underemployed in July 2025.
All measures tend to respond in a similar fashion to the business cycle. Regardless of which measure is deemed appropriate, rates of labor underutilization have generally moved up and down together. While the rates for measure U-6 are high relative to the official definition of the unemployment rate (U-3), both U-3 and U-6 show very similar economic trends in Oregon’s labor market over time. All measures, except for the U-1, spiked to record highs in April 2020, recovered over the course of the next 2-3 years, and have trended up slightly since then.
Definitions and Notes
The “Alternative Measures of Labor Underutilization” published by the U.S. Bureau of Labor Statistics includes definitions for six measures, including the official unemployment rate (U-3).
- U-1: Persons unemployed 15 weeks or longer, as a percent of the civilian labor force.
- U-2: Job losers and persons who completed temporary jobs, as a percent of the civilian labor force.
- U-3: Official Unemployment Rate - Total unemployed, as a percent of the civilian labor force.
- U-4: Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers.
- U-5: Total unemployed plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force.
- U-6: Total unemployed plus all persons marginally attached to the labor force plus total employed part-time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.
Persons marginally attached to the labor force are neither currently working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months. They include discouraged workers, who are not currently looking for work due to discouragement about their job prospects.
Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.
Oregon figures are preliminary estimates.
All figures are seasonally adjusted.
*The five Oregon alternative measures of labor underutilization and the official unemployment rate are estimated using different methods and are not directly comparable.