The unemployment rate is a key indicator that shows how many people are without jobs. It’s calculated by dividing the number of unemployed workers by the total labor force and multiplying by 100. The figure is used to gauge the strength of the economy, but it’s not a complete picture.

To calculate the unemployment rate, the government conducts a monthly survey called the Current Population Survey (CPS). The CPS interviews over 60,000 households about their economic status and asks questions about their employment, job search, and current income. The data is seasonally adjusted and a range of other factors are taken into consideration. For example, the number of people who are working part-time but want full-time work, and those who have dropped out of the labor force due to retirement or other reasons, are not included in the official unemployment numbers.

There are six different ways to measure unemployment, but the most widely cited statistic is the U-3 unemployment rate, which counts only those jobless workers who have actively searched for work within the previous four weeks. Other rates, such as the U-5 and the U-6 rate, include discouraged workers and those marginally attached to the workforce.

LISEP’s True Rate of Unemployment (TRU) goes beyond the official unemployment statistics and includes all functionally unemployed workers. This category includes those who cannot afford to pay their bills, are unable to provide for their families and are in survival mode. The TRU also reflects the fact that Black, Hispanic and female workers are more likely to be functionally unemployed than White workers.