The Bureau of Labor Statistics measures employment and unemployment
(of those over 16 years of age) using two different labor force surveys
conducted by the United States Census Bureau (within the United States
Department of Commerce) and/or the Bureau of Labor Statistics (within
the United States Department of Labor) that gather employment statistics
monthly. The Current Population Survey (CPS), or "Household Survey",
conducts a survey based on a sample of 60,000 households. This Survey
measures the unemployment rate based on the ILO definition.
The data are also used to calculate 5 alternate measures of unemployment as a percentage of the labor force based on different definitions noted as U1 through U6:
- U1 : Percentage of labor force unemployed 15 weeks or longer.
- U2 : Percentage of labor force who lost jobs or completed temporary work.
- U3 : Official unemployment rate per ILO definition.
- U4 : U3 + "discouraged workers", or those who have stopped
looking for work because current economic conditions make them believe
that no work is available for them.
- U5 : U4 + other "marginally attached workers", or "loosely
attached workers", or those who "would like" and are able to work, but
have not looked for work recently.
- U6 : U5 + Part time workers who want to work full time, but cannot due to economic reasons.
Below is the overview of these six measures.
- U1:
This is the proportion of the civilian labor force that has been
unemployed for 15 weeks or longer. This unemployment rate measures
workers who are chronically unemployed. During business-cycle
expansions, this rate captures structural unemployment. However, during
lengthy business-cycle contractions, this rate is also likely to include
a significant amount of cyclical unemployment. U1 tends to be
relatively small, in the range of 1-2 percent.
- U2:
This is the proportion of the civilian labor force that is
classified as job losers (workers who have been involuntarily fired or
laid off from their jobs) and people who have completed temporary jobs.
During business-cycle expansions, this rate is likely to capture some
degree of frictional unemployment. However, during business-cycle
contractions, this rate is most likely to consist of cyclical
unemployment. U2 is larger than U1, but still remains substantially less than the official unemployment rate (U3).
- U3:
This is the official unemployment rate, which is the proportion of
the civilian labor force that is unemployed but actively seeking
employment.
- U4:
This is the official unemployment rate that is adjusted for
discouraged workers. In other words, discouraged workers are treated
just like other workers who are officially classified as unemployed,
being included in both the ranks of the unemployed and the labor force.
It is technically specified as the proportion of the civilian labor
force (plus discouraged workers) that is either unemployed but actively
seeking employment or discouraged workers. The addition of discouraged
workers generally adds a few tenths of a percentage point to the
official unemployment rate.
- U5:
This augments U4 by including marginally-attached workers to the
unemployment rate calculation. Marginally attached workers are potential
workers who have given up seeking employment for various reasons. One
of these reasons is that the workers believe such effort would be
futile, which places them in the discouraged worker category. Those who
have other reasons for not seeking employment are placed in the broader
marginally-attached workers category. The addition of
marginally-attached workers adds a few more tenths of a percentage point
to the official unemployment rate.
- U6:
This augments U5 by including part-time workers to the
unemployment rate calculation. The addition of part-time workers adds a
full 2-3 percentage points to the official unemployment rate. This
measure of unemployment is perhaps the most comprehensive measure of
labor resource unemployment available.
Who is counted as unemployed?
Persons are classified as unemployed if they do not have a job, have
actively looked for work in the prior 4 weeks, and are currently
available for work. Actively looking for work may consist of any of the
following activities:
- Contacting:
- An employer directly or having a job interview
- A public or private employment agency
- Friends or relatives
- A school or university employment center
- Sending out resumes or filling out applications
- Placing or answering advertisements
- Checking union or professional registers
- Some other means of active job search
Who is not in the labor force?
Labor force measures are based on the civilian noninstitutional
population 16 years old and over. Excluded are persons under 16 years of
age, all persons confined to institutions such as nursing homes and
prisons, and persons on active duty in the Armed Forces. The labor
force is made up of the employed and the unemployed. The remainder—those
who have no job and are not looking for one—are counted as "not in the
labor force." Many who are not in the labor force are going to school or
are retired. Family responsibilities keep others out of the labor
force.
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