Unemployment rate is a key economic statistic that shows how many people don’t have jobs and are actively looking for work. It is reported monthly by the Bureau of Labor Statistics (BLS). It is seasonally adjusted to account for predictable variations, such as extra hiring around the holidays. The BLS also reports a trend line, showing how unemployment has moved over time.
The unemployment rate is an important statistic to watch because high jobless rates can have devastating impacts. On a national level, they reduce consumer spending, which in turn cuts into business investment and leads to layoffs. High unemployment can also lead to a higher reliance on social welfare programs and reduced tax revenue for governments. And on a local level, it can cause social unrest, increase crime rates, and leave communities with a lasting sense of hopelessness that can be difficult to recover from.
It’s not easy to measure unemployment accurately, however. Some people may want to work but are not actively looking for jobs, or they may have become discouraged and given up searching. Others who have jobs but are not working full time for economic reasons may be categorized as “underemployed.” This can distort the overall picture of how many Americans are unemployed and underemployed.
That’s why economists use a variety of different measures to get the most complete picture. For example, the U-6 unemployment rate includes the U-3 rate plus discouraged workers and those marginally attached to the labor force (who want a job and have looked for one in the past year but gave up). Another common measure is the civilian labor force participation rate, which counts everyone who works or wants to work, including those with temporary jobs.