How is the National Unemployment Rate determined?

The national unemployment rate is determined by the Bureau of Labor Statistics.

The Bureau of Labor Statistics (BLS), a division of the United States Department of Labor, issues the national unemployment rate each month, which indicates the total number of people and the percentage of the civilian workforce unemployed during the previous month. To generate these numbers, the government conducts a monthly national current population survey (CPS), which consists of a sample of approximately 110,000 people in about 60,000 households. Each month during the week containing the 12th of the month, Census Bureau interviewers collect information from each family, including a list of family members, dates of birth, gender, race, ethnicity, and educational level. The examiner also compiles data on the employment status of each family member over the age of 16 and classifies them into one of three classifications: employed, unemployed, or not in the workforce. After collecting the information, the bureau extrapolates and weights the numbers with respect to race, gender, ethnicity, age, and residential status to reflect the proportions found throughout the United States, from which the agency derives the national unemployment rate.

Unemployed individuals who are currently looking for work are included in the national unemployment rate.

The Census Bureau selects each CPS unit carefully to provide a cross-sample representative of the entire United States (US) population. After dividing the US into approximately 2,025 geographic divisions, the agency chooses 824 areas to include in the sample, making sure it covers all states as well as a wide range of industries, farms, rural and urban environments. Each household in the sample provides information for four consecutive months, then rotates the sample for eight months, and then returns to using the sample for another four months, providing data comparable to the previous year. In any given month, 25% of households in the CPS change, while 75% of the sample provides a national unemployment rate comparable to the previous month with around 50% comparable to the previous year.

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BLS computers strictly interpret and assign the workforce ratings of sampled individuals. A person is employed if they perform any type of work, regardless of whether the work is temporary, part-time or full-time, paid or unpaid, during the sample week. This designation also includes workers who did not work during the sample week but have jobs such as maternity leave, vacation, sick leave, and strike. Unpaid workers who contribute at least 15 hours of service to a family business also fall into this category. Institutionalized people such as prisoners and the military are not included in employment statistics.

The ranks of the unemployed, from which the national unemployment rate is produced, include those who are currently unemployed but available for work. To meet the definition of unemployed, the individual must have actively sought work during the four weeks prior to the sample week. Active job searching can include contacting an employment agency, contacting or interviewing a potential employer, forwarding resumes, and responding to job advertisements. The BLS also assigns workers on temporary leaves or layoffs for this category. This definition does not include discouraged unemployed workers who have not engaged in active job-seeking activities in the past four weeks.

Jobless people who are not currently looking for work fall under the designation “out of the workforce”. A stay-at-home mother, an individual with a disability, or a discouraged worker with long-term unemployment may fall into this category. Individuals who sought employment in the previous 12 months are later designated as “marginally linked to the workforce”. Since the BLS assigns an individual to only one category, the bureau gives priority to any form of work activity. For example, an unemployed teacher who works part-time at a fast-food franchise is considered employed, even though she considers herself seriously underemployed.

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