Unemployment statistics tell you how healthy the economy is. Learn about the various types of unemployment, the causes, and terms that you'll need to understand the numbers.
The current U.S. unemployment rate was 5.2% in August 2021, the Bureau of Labor Statistics (BLS) said in its monthly report, released September 3, 2021. This unemployment rate was 0.2 percentage points lower than in July. While August 2021's unemployment rate is lower, it's still higher than early 2020 levels (3.5% with 5.7 million unemployed in February 2020).
The natural unemployment rate is the lowest level sustainable without creating inflation. In a healthy economy, workers are always coming and going, looking for better jobs. Until they find that new job, this jobless status is the natural rate of unemployment.
The Bureau of Labor Statistics (BLS) reports the U.S. unemployment rate on both a weekly and monthly basis. There are two unemployment rates reported: the "real," or "U-6," unemployment rate and "U-3," which is the rate most often reported in the media. For the U-3 rate, the BLS only counts people without jobs who are included in the labor force.
The unemployment rate formula is the number of unemployed people in the country, divided by the total number of workers available in the civilian labor force. The BLS has a specific definition of "unemployed" for determining this percentage. You must be older than age 16 and have been available to work full time during the past four weeks to be counted as unemployed. You must have actively looked for work during that same period.
To be counted as "long-term unemployed" by the Bureau of Labor Statistics (BLS), you must be unemployed for 27 weeks or longer and have actively sought employment during the past four weeks.
Structural unemployment refers to a mismatch between the jobs available and the skill levels of the unemployed. Unlike cyclical unemployment, it’s caused by forces other than the business cycle. It occurs when an underlying shift in the economy makes it difficult for some people to find jobs. It is harder to correct than other types of unemployment.
Frictional unemployment is when workers are jobless and looking for work in a healthy economy. It doesn't matter if they leave voluntarily or are fired. Others may be returning to the labor force. It's differentiated from other types of unemployment because it's part of normal labor turnover.
Cyclical unemployment is the main cause of high unemployment rates. Its caused by a downturn in the business cycle. It's part of the natural rise and fall of economic growth that occurs over time. Cyclical unemployment is temporary and depends on the length of economic contractions caused by a recession. A typical recession lasts around 18 months.
The unemployment rate is the number of unemployed divided by the number in the civilian labor force. Everyone without a job isn't necessarily unemployed, at least according to the Bureau of Labor Statistics. To be counted in the unemployment rate, you not only have to be without a job, you have to have actively looked for work in the past four weeks.
Underemployment occurs when workers' jobs don't use all their skills, education, or availability to work. There are two types of underemployment: visible and invisible. Visible includes employees who are working fewer hours than is typical in their field, while invisible includes workers in full-time jobs that don't use all their skills..
The real unemployment rate (U-6) is a broader definition of unemployment than the official unemployment rate (U-3). The U-6, or real unemployment rate, includes the underemployed, the marginally attached, and discouraged workers. For that reason, it's usually significantly higher than the U-3 rate.
The natural rate of unemployment is the lowest level that a healthy economy can sustain without creating inflation. To economists, it's a combination of frictional, structural, and surplus unemployment.
Discouraged workers are those who want—and are available—to work but have dropped out of the labor force because they believe there aren't any jobs for them. In August 2021, there were 392,000 workers categorized as discouraged, a decrease from the 617,000 reported in June and 507,000 in July. These figures are seasonally adjusted.
The labor force participation rate (LFPR) measures the amount of labor in an economy. The LFPR shows the number of people seeking work or working, expressed as a percentage of the total population.