The unemployment rate is a key measure of the health of the economy. It is calculated by dividing the number of people who are unemployed by the total labor force. But there are a variety of complications that can make it difficult to assess how healthy the labor market is. The simplest and most well-known is that people who are no longer seeking employment are not counted as part of the labor force, so the unemployment rate may underestimate the actual level of joblessness.
The Bureau of Labor Statistics (BLS) releases the unemployment rate each month as part of its monthly employment situation report. The most widely cited figure is the U-3 rate, which counts out-of-work Americans who have actively searched for jobs within the past four weeks. A more comprehensive measure, the U-6 rate, includes those who are in temporary work and those considered marginally attached to the labor force. The BLS also publishes a variety of other categories for its data, including those who have been out of work for 15 weeks or more, those working part-time for economic reasons, and those who are discouraged workers.
High unemployment is not good for the economy because it deprives consumers of income, which limits their ability to spend on goods and services. This in turn reduces the revenue of businesses, which can then lead to layoffs and further unemployment. In some cases, if unemployment persists for an extended period of time, government intervention is necessary to stimulate the economy and create new jobs.