The unemployment rate is a key economic indicator that measures the percentage of people without jobs. High unemployment rates indicate that the economy is struggling and may be heading toward a recession. Low unemployment rates, on the other hand, can signal that the economy is producing at its peak efficiency, driving wage growth and raising living standards over time.
Each month, the Bureau of Labor Statistics (BLS) reports the number of employed and unemployed workers in the United States. These figures, especially the unemployment rate, receive widespread coverage in the media.
The official unemployment rate, called the U-3 measure, is based on a sample survey of people in the workforce. This survey includes all adults who are not working, but are looking for work or have applied to get a job in the past four weeks. It excludes those who have stopped looking for work, have dropped out of school or are incarcerated. The survey is a snapshot of the labor market and cannot accurately reflect every person who has a problem finding a job.
However, the BLS also publishes more detailed data on the employment situation that goes beyond the headline unemployment rate. These data can help policymakers make informed decisions about steering the economy and countering unemployment. The more complete unemployment data are important because they reveal the degree to which an economy is underutilizing its labor force. The more complete information includes not just the number of jobless people but also how long they have been out of work, their level of skill and where they live.