The unemployment rate is a key labor market statistic that measures the number of people unemployed as a percentage of the total labor force. The labor force is the sum of employed and unemployed individuals, with the exception of those who are not working or looking for work, such as students, retirees, or homemakers.
The national unemployment rate is produced each month by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) using a monthly survey of households. The data is collected from a random sample of households and contains information on the number of working-age individuals who are employed, seeking employment, or not available for work. The BLS also provides state-by-state statistics and details about the labor force by industry, age, race/ethnicity, gender, and education level.
A variety of measurements exist to assess labor underutilization, including the official unemployment rate (U-3), which includes only those who have been unemployed for 15 weeks or longer; the U-2 measure, which adds those who have lost jobs and completed temporary jobs; the U-4 measure, which includes those discouraged from searching for work because they believe there are no jobs available; the U-5 measure, which is the U-4 plus discouraged workers, as well as those who want full-time employment but must accept part-time employment for economic reasons; and the JOLTS series, which is a newer measure that includes only those who have accepted full-time employment.
Many economists, academics and policy makers debate the causes of unemployment, but most agree that it is damaging to individuals, families and the economy as a whole. High unemployment reduces household incomes, which in turn can lead to reduced spending on goods and services and lower levels of investment. In addition, the purchasing power of unemployed workers is lost, which can lead to a chain reaction that leads to even more unemployment.