The unemployment rate is a measure of the percentage of the working-age population without jobs. It is a key indicator of the health of an economy’s labor market, rising when there are few job opportunities and falling when employment is high. The official unemployment rate is calculated by dividing the number of people unemployed by the total labor force. Other measures of unemployment include the underemployment rate (the number of people who are unemployed and working below their skill level) and the participation rate (the number of people who are either working or actively looking for work).
Each month, the Bureau of Labor Statistics produces a report on employment and the unemployment rate for the previous month. The figures are based on a survey that asks a sample of companies and government agencies how many people they have on their payrolls. The bureau also conducts a separate survey of households, asking them whether their members are employed or looking for jobs. The figures are then compiled to produce estimates of total employment and unemployment for the nation.
Several factors affect the unemployment rate, including economic conditions and the policies of governments. For example, advances in new technologies can cause old industries to decline and shed workers. This is known as structural unemployment.
On a personal level, high unemployment rates can cause families to lose income and lead to financial stress. It also reduces consumer spending, which can slow the economy’s growth. In addition, it puts a strain on government resources through increased reliance on social welfare programs and lost tax revenue.