Unemployment rate is a key economic statistic that tells you how many people are out of work. The number varies from country to country, as some governments measure unemployment differently than others. However, the most common metric is the headline U-3 unemployment rate, which looks at out-of-work Americans who have actively searched for employment in the past four weeks. Other measures are also important, such as the U-6 rate, which includes unemployed people and discouraged workers. This broader metric gives you a more complete picture of labor market underutilization.
Unemployed people can have a negative effect on the economy. They can lower consumer spending, which is an essential component of economic growth. They can also impose a heavy burden on government resources through increased reliance on social welfare programs and decreased tax revenue. In addition, high unemployment can lead to a wide range of social problems in the community.
The unemployment rate is calculated by the Bureau of Labor Statistics (BLS), an agency within the Department of Commerce. Each month, a BLS survey asks individuals whether they are currently working or searching for work. The number is then divided by the total population of adults that are working-age. This metric can be complicated because it doesn’t always include all out-of-work individuals. For example, a person may not be looking for work because they feel their skills are outdated or that jobs aren’t available in their field. This could mean they are functionally unemployed, or “hidden,” in the data.