I think I’ve got it this time. The U3 statistic I came up with yesterday had no way to account for excluded workers re-entering the work force. I didn’t fully understand how it managed to track the Bureau of Labor Statistics U3 so closely. And it turns out to have seriously understated matters, anyway.

The quandary I’ve faced is trying to figure out how many people would work if the opportunity arose, given population changes and people leaving and re-entering the BLS definition of the labor market. Given that financial conditions have deteriorated for all but the most well off in society, it follows that given a reasonable opportunity, the maximum proportion of the civilian non-institutionalized population that has ever worked, would still be working now. That proportion has grown over time. In 1947, BLS counted 58.29 percent of the population as being in the labor market. It reached 67.10 percent in 1997 while the dot-com boom bubble was still inflating.

I am now applying that percentage to the civilian non-institutionalized population (over 16 years of age) to get an optimum labor market size. I subtract the number of people counted as employed in the household survey results to find a number of unemployed. That divided by the optimum labor market size yields what I will call Admiral Janeway’s U3 statistic from here on out.

This picture is quite a bit different, and being based on a more coherent methodology, I think more accurate. The January unemployment rate comes in as 12.95 percent, down from a peak in December of 13.32 percent. In the annual numbers, 2009’s rate of 11.59 percent considerably exceeds a previous peak of 9.69 percent in 1982.

Caveats from yesterday still apply. This does not account for the portion of the population that the BLS has never counted as part of the labor market but would seek work if they believed opportunity was available. It still does not account for Riane Eisler’s caring workers. It does not account for underemployment, either in a traditional sense of people working part time when they’d prefer to work full time, or in a sense of people working in jobs that do not reflect their talents.

Admiral Janeway seems much happier with this version.