The word “unemployment” carries with it different connotations to different people. One classical definition of unemployment is provided by the International Labor Organization, which says that anyone who is without a job but wants to work is unemployed after they have searched for new employment for a minimum of four weeks. Inside the United States, the Department of Labor’s Bureau of Labor Statistics is in charge of maintaining an accurate monthly unemployment rate, which helps gauge the overall economic health of the country and how well an economic recovery is going at a time of a financial recession or depression. Although there are similar organizations throughout the world that track employment and unemployment statistics and trends, this article will focus solely on the United States Bureau of Labor Statistics and the different unemployment rate data points they offer on a regular basis.
How the Bureau of Labor Statistics Operates
The United States Bureau of Labor Statistics tracks the unemployment rates for all individuals who are age 15 or older through two primary (and quite expansive) surveys. The first is commonly known as the “Household Survey” (more formally known as the Current Population Survey). The Household Survey gathers data on approximately 60,000 homes and measures how many of them have been out of work for at least four weeks in a row but are taking steps to find a new job. The other survey is commonly known as the “Payroll Survey” (more formally known as the Current Employment Statistics survey). It gathers information from approximately 400,000 businesses and the size of their respective payrolls do determine trends of hiring and firing across different regions, industries and demographics. This information can also help individual state department of welfare or department of social services known what level of weekly unemployment claims to expect in the near future.
Measurements of the Current Unemployment Rate
With these two monthly surveys in hand, the Bureau of Labor Statistics then releases six different measurements of unemployment. Each of these six measurements is known by a letter-number combination. In all instances the letter in the combination is “U”. Therefore, the six data points provided are known as U1, U2, U3, U4, U5 and U6.
- U1 details what percentage of the “labor force” (defined as those who are actively looking for a job) have been without any type of employment for a minimum of 15 weeks.
- U2 explains what percentage of the United States work force have been laid off or otherwise lost their jobs (this also includes individuals who are out of work because a temporary or seasonal job was completed).
- U3 is the well known unemployment rate most people are familiar with and hear talk about on the evening news from time to time (this is also known as the general “US unemployment rate”).
- U4 is the “discouraged worker” index, which is made up of U3 plus anyone who wants to find a new job but has given up because they do not have any hope for finding employment anytime soon.
- U5 is composed of U4 plus people who want to work but have not made much of an effort to find employment lately.
- U6 equals U5 plus anyone who is dealing with underemployment (i.e., someone who wants to work full time but cannot find a job that will allow that to happen).
For more information on the USA unemployment rate, including more details on how the general unemployment rate is organized and calculated, go to the Bureau of Labor Statistics’ website.
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