Unemployment rate is an economic indicator that measures the percentage of people who are without jobs. It is a key component in the health of an economy, and it can affect the quality of life for millions of individuals and families. High unemployment can lead to financial instability, and long-term unemployment can erode professional skills that make it difficult to find new employment.
The Bureau of Labor Statistics reports the unemployment rate every month, using data from a survey that asks 60,000 households whether their members are working or looking for work. It is a complicated statistic, and there are many different ways to measure it. The most common way to calculate the unemployment rate is to count all those who are not employed but who actively sought employment in the past four weeks, divided by the total population of people of working age. This statistic is known as the official unemployment rate, or U3. Other ways to calculate the unemployment rate include counting all those who are out of work but who have not looked for jobs in the past 12 weeks (U4), and adding those who would prefer full-time work but can only find part time work (U5).
Unemployment has many negative effects on the economy and on people’s lives. On a macro level, it reduces consumer spending, which in turn slows economic growth. It also increases reliance on government programs, and it cuts into tax revenue. On an individual level, it causes financial distress and can erode self-esteem. On a local level, it can increase crime rates and cause social unrest.