Every month, the government releases figures on employment and unemployment. These statistics provide important information to policymakers about the current state of the economy and its future trajectory. The headline figure that gets a lot of attention is the unemployment rate, which measures the number of people who are jobless as a percentage of all working-age Americans. But the official numbers only tell part of the story.
There are different ways to measure unemployment, and each has its strengths and weaknesses. The Bureau of Labor Statistics releases six different unemployment rates, ranging from U-3 to the more comprehensive U-6. The difference is that U-3 counts only people who lost their jobs in the past week, while U-6 includes everyone in U-3 plus those who want full time work but can’t find it and those considered “marginally attached” to the workforce.
Each month, the BLS surveys approximately 60,000 households across the country. The survey asks questions about the industry and occupation of the last job, when it ended, and why the person is out of a job (for example, they quit their job or gave up looking for one). The information collected also breaks down by race, gender, age, veteran status, and geography.
There are many forces that affect the natural rate of unemployment, from the usual pattern of companies expanding and contracting their workforces to social and economic factors affecting the willingness of workers to seek jobs and the ability of businesses to hire. The result is that the unemployment rate will vary from period to period.
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