The unemployment rate is a key measure of the health of an economy. It reflects the percentage of people who are unemployed and looking for work. It is calculated as the number of jobless people divided by the total labor force (all those ages 16 and over who have either jobs or are available to work). There are several different measures of unemployment, but the most commonly quoted one is called U-3. The BLS publishes this figure as part of its monthly Employment Situation Report, and it’s produced through a survey that asks people whether they’re unemployed or actively seeking work. To qualify as being unemployed, individuals must meet strict criteria, such as contacting employers, attending job interviews, or sending out resumes.
But this official count doesn’t account for people who have gotten discouraged by the lack of job opportunities and stopped looking. These are often known as the “dropouts.” High unemployment rates can have a negative impact on families, who lose their income and may experience self-criticism, guilt, feelings of hopelessness or helplessness, and depression, among other difficulties. It can also be bad for the economy, as consumers spend less when they’re not buying goods and services.
The other main measure of unemployment is called the U-5 rate, which takes into account both unemployed people and discouraged workers. But this is also flawed because it doesn’t take into account those who have given up on looking for a job or have retired from the workforce.