Unemployment rates are one of the most important economic indicators. They provide information about the state of the labor market and help policymakers make informed decisions that steer the economy and counter unemployment.
The unemployment rate is the percentage of people who do not have a job and are actively looking for work, divided by the total population of working-age individuals (the labor force). It is usually expressed as a monthly figure. The figures are based on a survey of households, where interviewers ask individuals questions about their job status and other labor market activities. The survey is conducted by the Census Bureau and covers people aged 16 or older. The unemployment rate is usually higher during recessions and is lower during boom periods.
While economists, academics and social scientists debate the causes of unemployment and the best remedies for it, most agree that there are three main types: frictional, structural and cyclical unemployment. Frictional unemployment occurs when rapid advances in new technologies threaten the profits of established industries and require layoffs. Structural unemployment arises when the decline of an industry causes the loss of jobs. For example, the decline of newspaper readership due to web-based advertising has caused the loss of many jobs for journalists and printers.
In addition to the official unemployment rate, BLS also reports other measures of labor underutilization. These alternative rates, referred to as U1-U6, are more inclusive and provide a broader sense of the state of the labor market.
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