People who do not have a job but are actively looking for work.
Total sum of employed and unemployed persons.
function calculateUnemploymentRate() {
var unemployedStr = document.getElementById('unemployedCount').value;
var laborForceStr = document.getElementById('laborForce').value;
var unemployed = parseFloat(unemployedStr);
var laborForce = parseFloat(laborForceStr);
var resultDiv = document.getElementById('calcResult');
if (isNaN(unemployed) || isNaN(laborForce)) {
resultDiv.style.display = 'block';
resultDiv.style.borderLeftColor = '#e74c3c';
resultDiv.innerHTML = "Please enter valid numerical values for both fields.";
return;
}
if (laborForce <= 0) {
resultDiv.style.display = 'block';
resultDiv.style.borderLeftColor = '#e74c3c';
resultDiv.innerHTML = "The Labor Force must be greater than zero.";
return;
}
if (unemployed laborForce) {
resultDiv.style.display = 'block';
resultDiv.style.borderLeftColor = '#f39c12';
resultDiv.innerHTML = "Note: Usually, the number of unemployed people cannot exceed the total labor force. Please check your inputs.";
// We calculate anyway, but warn.
} else {
resultDiv.style.borderLeftColor = '#27ae60';
}
var rate = (unemployed / laborForce) * 100;
resultDiv.style.display = 'block';
resultDiv.innerHTML = "Unemployment Rate: " + rate.toFixed(2) + "%Based on " + unemployed.toLocaleString() + " unemployed out of a labor force of " + laborForce.toLocaleString() + ".";
}
How Economists Calculate the US Unemployment Rate
Understanding the health of the United States economy often begins with analyzing labor statistics. One of the most frequently cited indicators is the unemployment rate. While it appears as a simple percentage in news headlines, economists calculate the US unemployment rate by using specific formulas and rigorous definitions set by the Bureau of Labor Statistics (BLS).
The Core Formula
At its most basic level, the unemployment rate represents the percentage of the labor force that is jobless and actively looking for work. Economists do not simply count everyone who is not working; they specifically count those who fit the definition of "unemployed" within the "civilian labor force."
To accurately use the calculator above or perform the math yourself, it is crucial to understand who qualifies for which category according to the Current Population Survey (CPS).
Employed: People with jobs are considered employed. This includes part-time and temporary work.
Unemployed: To be classified as unemployed, a person must not have a job, must be available to work, and must have actively looked for work in the past four weeks.
Civilian Labor Force: This is the sum of all employed and unemployed people. It excludes military personnel, people in institutions (like prisons), and those not looking for work (such as retirees or students).
Step-by-Step Calculation Example
Let's assume an economist is looking at a specific region with the following data:
Number of Employed People: 145,000
Number of Unemployed People: 5,000
Step 1: Determine the Labor Force
First, add the employed and unemployed to find the total labor force. 145,000 (Employed) + 5,000 (Unemployed) = 150,000 (Labor Force)
Step 2: Apply the Unemployment Formula
Divide the number of unemployed persons by the labor force. 5,000 ÷ 150,000 = 0.0333…
Step 3: Convert to Percentage
Multiply by 100 to get the rate. 0.0333 × 100 = 3.33%
In this scenario, the unemployment rate is 3.33%.
Why is This Important?
Economists can calculate the US unemployment rate by using these metrics to gauge economic slack. A high unemployment rate typically indicates an economy operating below its potential, leading to reduced consumer spending and slower growth. Conversely, a very low unemployment rate might lead to wage inflation as businesses compete for scarce talent.
Common Misconceptions
One common critique is that the standard unemployment rate (U-3) does not capture "discouraged workers"—people who want a job but gave up looking because they believe no work is available. These individuals are not counted in the labor force, meaning they do not affect the standard unemployment calculation. To address this, the BLS publishes alternative measures (like U-6) which include discouraged workers and those working part-time for economic reasons.