The unemployment rate is an important economic indicator that gives a sense of how hard it is for workers to find jobs. It is one of the factors taken into account when determining monetary policy and other strategic economic decisions by government officials. It is calculated by dividing the number of unemployed people by the total labor force. This figure is published by the Bureau of Labor Statistics, a division of the Department of Commerce.
The BLS publishes several different iterations of the unemployment rate, but the most commonly used is U-3. This measures the percentage of the workforce that has been out of work for 15 weeks or more. It excludes people who have already found work and those who are unable to start looking for a job due to childcare obligations or health reasons. The more comprehensive measure of unemployment is U-6, which includes those who have been unemployed for more than 14 weeks, those unable to find full-time jobs, and those working involuntarily part time because of economic reasons.
Another important consideration is that unemployment figures don’t always capture all of the slack in the labor market. A good example of this is people who are “discouraged” and have given up searching for jobs. Also, the data doesn’t include workers who have had to settle for employment below their skills or expectations (such as a mechanical engineer who drives a cab). This form of unemployment is called “frictionary unemployment” and is normal in most economies.
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