As I described in my previous post, because the official unemployment rate does not account for discouraged workers, it undercounts the true magnitude of unemployment in the United States. To address this problem, I used pre-recession labor-force participation rates corrected for demographic trends to estimate the size of the true labor force. From these numbers I calculated the rate of true unemployment for the U.S. since 2007.
I have also calculated a true unemployment rate for the St. Louis MSA and found a true unemployment rate of 10 percent in November 2011, which is 1.4 percentage points above the official unemployment rate. My methodology is explained in a new paper in my institute's policy series. The figure below shows the true and official unemployment rates for the St. Louis MSA since the start of the recession.
Note that St. Louis has been recovering slowly and steadily for over a year, in contrast with the country as a whole, which did not see any real recovery in its true unemployment rate until mid 2011. As a result, despite having a higher peak than the U.S. (11.6 vs. 10.9), the true unemployment rate in St. Louis is now very similar to that of the country as a whole.