Calculating Unemployment

One of the determining factors of a country’s economic status at any given point in time is its unemployment rate. Whenever unemployment rate in the country is high, it is a cause for concern because that would mean some people in the labor force do not have means to support their daily needs due to loss of income. On a monthly basis, the Bureau of Labor Statistics calculates unemployment rates in the country. Determining the rate is not an easy task. It follows a unique design aimed at targeting the factors that resulted to an increase in the number of active jobseekers not getting a job.

The bureau gathers data monthly from 60,000 households on 250 metropolitan areas to measure few macroeconomic figures, and among them is the unemployment rate. Before they can begin with the survey, it is important for them to distinguish those who are employed, unemployed, and out of the labor force.
1. Employed- currently working individuals; holds a job even when on vacation, maternity or sick leave, etc.
2. Unemployed- people who are not currently working, but are actively seeking for a job in the last four weeks and is available to work anytime.
3. Out of the Labor force- not currently looking for a job or not working due to responsibilities (e.g. got married, care for the sick, raise kids).

When people are placed into the appropriate groups, only the figures of the employed and the unemployed will be used in the calculation of the unemployment rate. The labor force is determined as the total number of people who are either employed or unemployed. The unemployment rate is calculated by dividing the number of unemployed of people with the total number of people in the labor force. As an economic formula, it is put this way:
Unemployment rate = Unemployed Workers / (Employed + Unemployed Workers) x 100%