The unemployment rate is a key economic indicator that measures the number of jobless people as a percentage of the total labor force. It is calculated by dividing the sum of all employed and unemployed individuals by the total number of people in the labor force (the number of those working or looking for work).
The official unemployment rate only includes those who have actively sought employment within the past four weeks and are available to take a job. The BLS also releases other measurements of unemployment that include discouraged workers and marginally attached workers. These more comprehensive measures can help give a more complete picture of the state of the economy.
Most modern economists agree that some level of unemployment is necessary to avoid inflation and to allow workers to find other jobs if their current one becomes too challenging or boring. However, the unemployment rate should remain low enough that those who want full-time jobs should be able to find them.
In order to address high unemployment, policymakers need accurate and timely information about a variety of aspects of the problem. They need to know how many people are jobless, how long they have been jobless, what their skills and education levels are, and where they are located.
While some of this information can be gleaned from the establishment report, the vast majority is collected through a monthly sample survey called the Current Population Survey (CPS). The CPS has been conducted since 1940 and is currently run by the Census Bureau.
