How is the unemployment rate calculated in the United States?
The official rate divides unemployed people by the labour force, using weighted household-survey estimates rather than unemployment-insurance claims.
By Sarah Jenkins · Chief Macro Economics Correspondent
· 4 min read
The U.S. unemployment rate is calculated as unemployed people divided by the labour force, multiplied by 100. The national figure is an estimate from a monthly household survey, measuring the share of people in the labour force who are jobless and looking for work.
The arithmetic is straightforward. The underlying estimates come from the Bureau of Labor Statistics' Current Population Survey, conducted by the Census Bureau.
How the calculation works
Unemployment rate = (unemployed people ÷ labour force) × 100
The labour force is the sum of employed and unemployed people. In the official measure, unemployed people are those without a job who are looking for work. People outside those two groups are not included in the labour-force denominator.
Worked example: calculation, not an official estimate
Assume a survey-based estimate finds 96,000 people employed and 4,000 unemployed.
- Calculate the labour force: 96,000 employed + 4,000 unemployed = 100,000 people.
- Divide unemployed people by the labour force: 4,000 ÷ 100,000 = 0.04.
- Convert to a percentage: 0.04 × 100 = 4%.
The unemployment rate in this example is 4%. The 4,000 unemployed people are part of the labour force because they are looking for work.
Where the national estimate comes from
The national rate comes from the Current Population Survey, or CPS, a monthly survey conducted by the Census Bureau for BLS. It covers about 60,000 eligible households, representing approximately 110,000 individuals each month. The CPS is a sample designed to represent the United States, not a monthly count of every household.
Interviewers ask sampled households about jobholding, job seeking and non-labour-force status during the survey reference week, usually the week that includes the 12th of the month. Each person is classified from those responses. The results are weighted to Census Bureau population estimates, reflecting age, sex, race, Hispanic ethnicity and state of residence.
Related measures
- Unemployed people: people without a job who are looking for work.
- Labour force: employed people plus unemployed people.
- Unemployment rate: unemployed people as a percentage of the labour force.
- Labour-force participation rate: the labour force as a percentage of the adult population.
Why unemployment-insurance claims differ
Unemployment-insurance records do not provide a complete count of unemployed people. Some jobless people exhaust benefits, are ineligible, delay applying or do not apply. The national unemployment rate instead uses the CPS household survey to estimate employment and unemployment.
Seasonal adjustment and limits
Seasonal adjustment removes customary recurring patterns, including school-break activity, winter construction slowdowns and temporary holiday retail employment, to help identify underlying month-to-month trends.
The rate is an estimate from a sample and would not necessarily match a full population count. It also does not distinguish full-time from part-time work, does not account for underemployment, and does not include people who have stopped looking for work.
National and state estimates
The national figure is computed from the CPS. For states and the District of Columbia, the Connecticut Department of Labor says BLS procedures use statistical models that combine household-survey responses, unemployment-insurance claims and estimates of nonfarm jobs. Those estimates may be revised as later information becomes available.
Frequently asked questions
Who is counted as unemployed in the official U.S. measure?
The official measure counts people without a job who are looking for work. They are included in the labour force, the denominator used to calculate the unemployment rate. People who have stopped looking for work are not included in the official unemployed count.
Why are unemployment-insurance claims different from the unemployment rate?
Claims relate to people who apply for unemployment-insurance benefits, while the official rate is estimated from the Current Population Survey. Some jobless people have exhausted benefits, are ineligible, delay applying or do not apply, so claims are not a complete measure of unemployment.
What is the difference between the unemployment rate and the labour-force participation rate?
The unemployment rate is unemployed people as a percentage of the labour force. The labour-force participation rate is the labour force as a percentage of the adult population.
Why are state unemployment estimates produced differently from the national rate?
The national rate is computed from the Current Population Survey. The Connecticut Department of Labor says that state and District of Columbia estimates use BLS procedures and models combining household-survey responses, unemployment-insurance claims and estimates of nonfarm jobs.
Sources
- How the Government Measures Unemployment — www.bls.gov
- U.S. Unemployment Rate Calculation Explained — www.investopedia.com
- Unemployment Calculator (Unemployment Rate) — www.omnicalculator.com
- How is the Unemployment Rate Calculated? — www1.ctdol.state.ct.us
