Some fictional examples of typical responses that may result in a person being classified as unemployed are:. The total unemployment figures cover more than the number of people who have lost jobs. They include people who have quit their jobs to look for other employment, workers whose temporary jobs have ended, individuals looking for their first job, and experienced workers looking for jobs after an absence from the labor force for example, stay-at-home parents who return to the labor force after their children have entered school.
Information also is collected for the unemployed on the industry and occupation of the last job they held if applicable , how long they have been looking for work, their reason for being jobless for example, did they lose or quit their job , and their job search methods. As mentioned previously, the labor force is made up of the employed and the unemployed. The remainder—those who have no job and are not looking for one—are counted as not in the labor force. Many who are not in the labor force are going to school or are retired.
Family responsibilities keep others out of the labor force. Since the mids, typically fewer than 1 in 10 people not in the labor force reported that they want a job.
A series of questions is asked each month of persons not in the labor force to obtain information about their desire for work, the reasons why they had not looked for work in the last 4 weeks, their prior job search, and their availability for work. These questions include the following the bolded words are emphasized when read by the interviewers. These questions form the basis for estimating the number of people who are not in the labor force but who are considered to be marginally attached to the labor force.
These are individuals without jobs who are not currently looking for work and therefore are not counted as unemployed , but who nevertheless have demonstrated some degree of labor force attachment. Specifically, to be counted as marginally attached to the labor force, they must indicate that they currently want a job, have looked for work in the last 12 months or since they last worked if they worked within the last 12 months , and are available for work.
Discouraged workers are a subset of the marginally attached. Discouraged workers report they are not currently looking for work for one of the following types of reasons:. When the population is classified according to who is employed, unemployed, and not in the labor force on the basis of their activities during a given calendar week, situations are often encountered where individuals have engaged in more than one activity. Since individuals are counted only once, a system of priorities is used to determine their status.
Labor force activities take precedence over non-labor force activities, and working or having a job takes precedence over looking for work. Some hypothetical examples are:. To summarize, the employed are: All those who did any work for pay or profit during the survey reference week. All those who did at least 15 hours of unpaid work in a business or farm operated by a family member with whom they live. All those who were temporarily absent from their regular jobs because of illness, vacation, bad weather, labor dispute, or various personal reasons, whether or not they were paid for the time off.
The unemployed are: All those who did not have a job at all during the survey reference week, made at least one specific active effort to find a job during the prior 4 weeks, and were available for work unless temporarily ill. All those who were not working and were waiting to be called back to a job from which they had been laid off. They need not be looking for work to be classified as unemployed.
Because of the wide variety of employment arrangements and job seeking methods found in the U. When all of the details are considered, the definitions may seem rather complicated. The basic concepts, however, remain little changed since the inception of the CPS in People with jobs are employed , people who do not have jobs and are looking for jobs are unemployed , and people who meet neither labor market test are not in the labor force.
Other important labor market statistics are developed using the basic survey estimates of people employed, unemployed, and not in the labor force. These statistics include: The number of people in the labor force. This measure is the sum of the employed and the unemployed. In other words, the labor force level is the number of people who are either working or actively seeking work.
The national unemployment rate. Perhaps the most widely known labor market indicator, this statistic reflects the number of unemployed people as a percentage of the labor force. The labor force participation rate. This measure is the number of people in the labor force as a percentage of the civilian noninstitutional population 16 years old and over. In other words, it is the percentage of the population that is either working or actively seeking work.
The employment-population ratio. This measure is the number of employed as a percentage of the civilian noninstitutional population 16 years old and over. In other words, it is the percentage of the population that is currently working. Each month, national summary statistics on unemployment and employment are published in a news release titled The Employment Situation. The dates of release are announced in advance and made available on the BLS release calendar.
Detailed information also is published in tables online and in numerous news releases and reports. Historical data series can be obtained from various database tools. Total employment and unemployment are higher in some parts of the year than in others. For example, unemployment is higher in January and February, when it is cold in many parts of the country and work in agriculture, construction, and other seasonal industries is curtailed.
Also, both employment and unemployment rise every June, when students enter the labor force in search of summer jobs. The seasonal fluctuations in the number of employed and unemployed people reflect not only the normal seasonal weather patterns that tend to be repeated year after year, but also the hiring and layoff patterns that accompany regular events such as the winter holiday season and the summer vacation season. These variations make it difficult to tell whether month-to-month changes in employment and unemployment are due to normal seasonal patterns or to changing economic conditions.
To deal with such problems, a statistical technique called seasonal adjustment is used. This technique uses the past history of the series to identify the seasonal movements and to calculate the size and direction of these movements. A statistical procedure is then applied to the estimates to remove the effects of regular seasonal fluctuations on the data.
Seasonal adjustment eliminates the influence of these fluctuations and makes it easier for users to observe fundamental changes in the level of the series, particularly changes associated with general economic expansions and contractions. Many of the monthly time series for major labor market indicators, especially those in the monthly Employment Situation report, are seasonally adjusted.
There is only one official definition of unemployment—people who are jobless, actively seeking work, and available to take a job, as discussed above. The official unemployment rate for the nation is the number of unemployed as a percentage of the labor force the sum of the employed and unemployed.
Some have argued, however, that these unemployment measures are too restricted, and that they do not adequately capture the breadth of labor market problems. For this reason, economists at BLS developed a set of alternative measures of labor underutilization. These measures, expressed as percentages, are published every month in The Employment Situation news release. They range from a very limited measure that includes only those who have been unemployed for 15 weeks or more to a very broad one that includes total unemployed, all people marginally attached to the labor force, and all individuals employed part time for economic reasons.
More information about the alternative measures is available on the BLS website. The CPS also is used to obtain detailed information on particular segments of the population and labor force. Generally, these "supplemental" inquiries are repeated annually or biennially in the same month and include topics such as annual earnings, income , and poverty of individuals and families published by the Census Bureau ; the extent of work experience of the population during the prior calendar year; the employment of school-age youth, recent high school graduates, and dropouts; job tenure; displaced workers; and veterans with a service-connected disability.
Some additional supplements that are unrelated to labor force issues, such as those on smoking and voting, also are conducted through the CPS, although they are not sponsored by BLS. Supplemental questions are asked following the completion of the regular monthly labor force questions. Children, for example, should not be counted as unemployed. Surely, the retired should not be counted as unemployed.
Many full-time college students have only a part-time job, or no job at all, but it seems inappropriate to count them as suffering the pains of unemployment. Some people are not working because they are rearing children, ill, on vacation, or on parental leave. The point is that the adult population is not just divided into employed and unemployed.
A third group exists: people who do not have a job, and for some reason—retirement, looking after children, taking a voluntary break before a new job—are not interested in having a job, either. It also includes those who do want a job but have quit looking, often due to being discouraged by their inability to find suitable employment.
Economists refer to this third group of those who are not working and not looking for work as out of the labor force. Figure 1. The total adult, working-age population in was Out of this total population, Note that "work" in an economic sense strictly refers to work outside of the home or school, since, in a general sense, students and stay-at-home parents do plenty of work! For specific statistical purposes, only individuals age 16 and older are counted in the potential labor force, and they are only counted in the labor force if they are actively working or have looked for work in the past four weeks.
Obviously, people are counted as employed if they have full-time jobs. That said, people are also counted as employed if they have part-time jobs, are self-employed, or work for a family business even if they don't explicitly get paid for doing so. In addition, people are counted as employed if they are on vacation, maternity leave, etc. People are counted as unemployed in an official sense if they are in the labor force and not employed.
More precisely, unemployed workers are people who are able to work, have actively looked for work in the past four weeks, but have not found or taken a job or been recalled to a previous job. The unemployment rate is reported as the percentage of the labor force that is counted as unemployed.
Mathematically, the unemployment rate is as follows:. Because output per worker is ultimately what determines the standard of living in an economy, it's important to understand not only how many people who want to work are actually working, but also how much of the overall population wants to work. Therefore, economists define the labor force participation rate as follows:. Because the unemployment rate is measured as a percentage of the labor force, an individual is not technically counted as unemployed if she has gotten frustrated with looking for a job and has given up on trying to find work.
These "discouraged workers" would, however, probably take a job if it came along, which implies that the official unemployment rate understates the true rate of unemployment. This phenomenon also leads to counterintuitive situations where the number of employed people and the number of unemployed people can move in the same rather than opposite directions. In addition, the official unemployment rate can understate the true unemployment rate because it doesn't account for people who are underemployed- i.
The remaining As you will learn, however, this seemingly simple chart does not tell the whole story. The U. Bureau of the Census, asks a series of questions to divide up the adult population into employed, unemployed, or not in the labor force.
To be classified as unemployed, a person must be without a job, currently available to work, and actively looking for work in the previous four weeks. Thus, a person who does not have a job but who is not currently available to work or has not actively looked for work in the last four weeks is counted as out of the labor force.
Privacy Policy. Skip to main content. Search for:. Who Counts in Unemployment? Learning Objectives Define and differentiate between employed, unemployed, and being in or out of the labor force.
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