Unemployment Rate
The Unemployment Rate is the percentage of the labor force that is jobless, available for work, and actively seeking work. To be counted as unemployed, a person generally must have:
At A Glance#
| Field | Detail |
|---|---|
| Provider | U.S. Bureau of Labor Statistics (BLS) |
| Survey / Tool | Current Population Survey (CPS) — conducted by the Census Bureau for BLS |
| Frequency | Monthly |
| Indicator Type | Lagging |
| Main Use | Headline measure of labor-market weakness |
| Live Series | Trading Economics — Unemployment Rate |
What It Is#
The Unemployment Rate is the percentage of the labor force that is jobless, available for work, and actively seeking work. To be counted as unemployed, a person generally must have:
- Not been employed during the survey reference week
- Been available for work (except for temporary illness)
- Made a specific, active effort to find employment sometime during the 4-week period ending with the survey reference week
Exception: People on temporary layoff waiting to be recalled do not need to actively search to be counted as unemployed.
Who Provides It#
BLS publishes the Unemployment Rate using the Current Population Survey (CPS) — the same monthly household survey conducted by the Census Bureau that produces the Labor Force Participation Rate (LFPR).
How It Is Collected#
- Monthly survey of approximately 60,000 U.S. households.
- Interviewers ask each household member about employment status and job-search activity during the reference week (usually the week containing the 12th of the month).
Broad categories inside unemployment:
| Category | Definition |
|---|---|
| Job losers | Temporary layoffs, permanent job losers, and people who completed temporary jobs |
| Job leavers | People who voluntarily quit |
| Reentrants | People who previously worked, left the labor force, and are now searching again |
| New entrants | People who have never worked before |
BLS also tracks unemployment duration — mean and median weeks unemployed — to gauge whether spells are short or long.
How It Is Computed#
Where Labor Force = Employed + Unemployed.
Indicator Type#
Lagging. Employers usually wait until a recession is firmly in place before laying people off, and wait until a recovery is secure before hiring again. The unemployment rate therefore rises after economic weakness has already started and falls after recovery is already underway. The 4-week active-search requirement adds another structural delay.
Why It Matters#
A high unemployment rate signals labor-market weakness and income stress; a low rate usually signals a tight labor market. However, the unemployment rate must always be read alongside the Labor Force Participation Rate (LFPR): a falling unemployment rate driven by people leaving the labor force (discouraged workers, retirees) is not the same as one driven by genuine job creation.
The Federal Reserve uses the unemployment rate as part of its assessment of "maximum employment" under its dual mandate.
Related Notes#
- Labor Force Participation Rate (LFPR) — explains who is inside or outside the labor force
- Initial Jobless Claims — leading indicator that warns earlier when layoffs are rising
- Continuing Jobless Claims — measures whether unemployed workers remain on benefits
- Nonfarm Payrolls (NFP) — coincident counterpart that moves faster than the unemployment rate