While many people are familiar with the unemployment rate, there is sometimes confusion about where the rate comes from and how it is calculated. Generally speaking, the unemployment rate represents the portion of workers who are actively looking for work but cannot find a job.
The unemployment rate is based mainly on a monthly survey of roughly 60,000 households in the United States. Based on answers to survey questions, respondents are placed into three broad categories representing their employment status:
Those not in the labor force are broken down into even smaller categories--marginally attached workers, discouraged workers--that allow calculating alternatives to the official unemployment rate. The results of this household survey are presented in the Bureau of Labor Statistics' monthly Employment Situation report.
Answer the following questions to determine your employment status. Click on a question for detailed instructions.
Economists use employment status in several different measures of the condition of the economy. Some of the popular metrics that are derived from employment status include:
| Measure | Calculation |
|---|---|
| Labor Force Participation Rate (LFPR) | The percentage of the population age 16+ that is in the labor force |
| Unemployment Rate (U-3) | The percentage of the labor force that is unemployed |
| U-4 | The percentage of the labor force plus discouraged workers that is unemployed or discouraged |
| U-5 | The percentage of the labor force plus marginally attached workers that is unemployed or marginally attached |
| U-6 | The percentage of the labor force plus marginally attached workers that is unemployed, marginally attached, or part-time for economic reasons |
The questionnaire shown here is a simplified version of the more detailed line of questioning in the Current Population Survey, from which the unemployment rate and other metrics are calculated.
The universe for this survey is the civilian noninstitutional population age 16 and over. This includes anyone who is not living in a penal institution, mental institution, or home for the aged, and is not on active duty in the armed forces.
The estimates in the diagram are approximated based on 4-quarter averages (2016:Q3 to 2017:Q2) of employment status in Indiana, from the Bureau of Labor Statistics, Local Area Unemployment Statistics.