Definition of Unemployment Rate

Unemployment Rate

The official definition of the unemployment rate, given below in a series of four definitions, contains a couple of unavoidable complications. (1) A person who loses a 40 hour per week job, but works for one hour mowing a lawn for pay is classified as employed. (2) A person who simply expresses interest in having a job is classified as unemployed. "Discouraged workers" who have lost a job, but do not make an effort to find a new job in a given week are not classified as unemployed or even as in the labor force. Both possibilities mean that the announced unemployment rate is not as definitive as it might sound.

Nonetheless, the unemployment rate is defined as the number of unemployed persons divided by the labor force, where the labor force is the number of unemployed persons plus the number of employed persons. The official definitions of these figures are as follows.

Employed persons (Current Population Survey). Persons 16 years and over in the civilian noninstitutional population who, during the reference week, (a) did any work at all (at least 1 hour) as paid employees, worked in their own business, profession, or on their own farm, or worked 15 hours or more as unpaid workers in an enterprise operated by a member of the family, and (b) all those who were not working but who had jobs or businesses from which they were temporarily absent because of vacation, illness, bad weather, childcare problems, maternity or paternity leave, labor-management dispute, job training, or other family or personal reasons, whether or not they were paid for the time off or were seeking other jobs. Each employed person is counted only once, even if he or she holds more than one job. Excluded are persons whose only activity consisted of work around their own house (painting, repairing, or own home housework) or volunteer work for religious, charitable, and other organizations.

Unemployed persons. Persons 16 years and over who had no employment during the reference week, were available for work, except for temporary illness, and had made specific efforts to find employment sometime during the 4-week period ending with the reference week. Persons who were waiting to be recalled to a job from which they had been laid off need not have been looking for work to be classified as unemployed.

Labor force (Current Population Survey). The labor force includes all persons classified as employed or unemployed in accordance with the definitions contained in this glossary

Unemployment rate. The unemployment rate represents the number unemployed as a percent of the labor force.

Source: Bureau of Labor Statistics

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