Relevance And Uses Of Unemployment Rate Formula
It is one of the most important indicators of the economic health of a nation. Although it is a lagging indicator, it provides a clear indication of the direction of the economy. Inherently, the unemployment rate is expected to increase when the economy is weak at which results in a scarcity of jobs. On the other hand, the unemployment rate is expected to fall when the economy is trending up. For instance, after the crisis of 2007-08, the unemployment in the US went up to 9.3% and 9.6% during 2008 and during 2009, which is one of the highest unemployment rates in the US during the last seven decades. As such, from the perspective of economists, the concept of the unemployment rate can be a good economic indicator.
Dont Be Fooled By Official Unemployment Rate Of 147% The Real Figure Is Even Scarier
If 14.7 percent unemployment is a portrait of devastation, then the real figure, which is closer … to 20%, is a glimpse of economic cataclysm.
The Bureau of Labor Statistics released unemployment data on Friday showing that the U.S. economy lost over 20 million jobs in April with the unemployment rate spiking to 14.7 percent, the worst since the Great Depression. The report reinforces what many have already seen up close, which is the continuing economic carnage on the American economy caused by the coronavirus. Heres the scary part, as shocking as the data is, reality is much worse because of quirks in the BLS methodology.
If 14.7 percent unemployment is a portrait of devastation, as the New York Times referred to it, then the real figure, which is closer to 20%, is a glimpse of economic cataclysm.
A03 Nsa: Employment Unemployment And Economic Inactivity For Men Aged From 16 To 64 And Women Aged From 16 To 59
Employment, unemployment and economic inactivity for men aged from 16 to 64 and women aged from 16 to 59 . The employment and inactivity rates shown in this table were the headline employment and inactivity rates until August 2010, when ONS replaced these headline rates with rates for those aged from 16 to 64 for both men and women. These new headline rates for those aged from 16 to 64 are shown in Table A02 NSA. These estimates are sourced from the Labour Force Survey, a survey of households.
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Unemployment Rate By City
State Benefits Facts: The labor force does not include anyone younger than 16 years of age, anyone in institutions such as nursing homes, prisons, or are active duty in the Armed Forces.
Annual Unemployment Rates By State
|Local Area Unemployment Statistics, U.S. Bureau of Labor Statistics|
|Units:||Unemployed percentage of the labor force|
- Persons are classified as unemployed if they do not have a job, are currently available for work, and have actively looked for work in the prior four weeks, or if they are waiting to be recalled to a job from which they have been laid off.
- The labor force includes the civilian noninstitutional population 16 years old and older.
- Unemployment is measured on a place of residence basis.
- Historical data are subject to revision by BLS.
Iowa Community Indicators Program, 175 Heady Hall Phone: 294-2954
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The True Rate May Be Even Higher Than 20 Percent:
There are other reasons why the real unemployment rate may even be higher than the adjusted figure of 20%:
- Quickly Outdated Inputs: The BLS uses household and business surveys from the middle of the month, in this case April, to derive the unemployment rate. Given that the velocity of economic carnage has only increased since the pandemic started, figures from mid-April may already be outdated in reflecting the current situation. As Nate Silver noted, our economic data just wasnt designed for a moment where entire sectors of the economy shut down pretty much overnight, leaving millions of people without jobs.
- BLS Revisions May Skew Higher: The 14.7 percent unemployment rate is only a preliminary estimate. BLS will revise it twice before holding it constant until its annual benchmarking process to improve its data series by incorporating additional information that was not available at the time of the initial publication of the estimates. In March, the revised figures increase job losses by close to 170,000 jobs – the initial report cited 701,000 jobs lost, whereas the adjusted figure was 870,000. All evidence points to April job losses being even deeper than in March, meaning that the revision for April could be even more drastic than 170,000 jobs.
Trump’s Average Unemployment Rate Is The Lowest In Recorded History
President Trump starts off 2020 having presided over a lower average unemployment rate than any president at a comparable point in office in recorded history.
On Friday, the Bureau of Labor Statistics reported that the unemployment rate held steady at a historically low 3.5% in December. Since February 2017, Trump’s first full month in office, the monthly unemployment rate has averaged 3.9%. No prior president has averaged less than 4% over the first 35 months of his presidency. The closest was Dwight Eisenhower, when the rate averaged 4.3% between February 1953 and December 1955.
Modern unemployment statistics did not start being kept until 1948, after Harry Truman’s first 35 months in office, so this analysis only starts with Eisenhower. Nonetheless, it does point to the unprecedented nature of this consistently low level of unemployment.
To be sure, this statistic isn’t predictive of the election outcome. The economy is only one of many factors that voters use to evaluate incumbent presidents. Also, voters tend to weigh the trend of the economy, which is not reflected in the average. For instance, George H.W. Bush averaged lower unemployment during the first 35 months of his presidency than his predecessor, Ronald Reagan. But the Reagan economy started weak, then expanded rapidly in the run-up to his reelection, whereas Bush inherited an economy in decent shape and was voted out of office when it had declined.
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What Are The Other Measures Of Us Unemployment
In response to criticisms that the official rate paints an unjustifiably rosy picture of the health of the labor market, the BLS publishes five alternative measures: U-1, U-2, U-4, U-5, and U-6. Though these are often referred to as unemployment rates , U-3 is the official and the most commonly cited national unemployment rate. The others are characterized as measures of “labor underutilization.”
Canada Unemployment Rate By Provinces
Canada entered a recession between 2008 and 2009, thus increasing Canadas unemployment rate. However, the average unemployment during this period reached 8.3 %. Hence, causing an increase by 2.2 %.
Consequently, about 1.52 million people became unemployed. However, from 2010, the average unemployment began to decrease. Thus, the country office came out of recession.
On the one hand, the unemployment rate refers to the proportion of people who are not working in the labor force. This proportion is people who are either available or looking for employment.
On the other hand, an economic recession is a period of time, when the overall economy of a country declines. Thus, leading to a higher rate of unemployment in the country.
Usually, economic recessions are temporary. However, the recession can go for a number of years. Economic recession and increased unemployment are linked, as business sales and revenues decline which consequently causes businesses to stop expanding.
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Blackwhite And Hispanicwhite Inequality Persists Amid Labor Market Recovery
EPI analyzes state unemployment rates by race and ethnicity, and racial/ethnic unemployment rate gaps, on a quarterly basis to generate a sample size large enough to create reliable estimates of unemployment rates by race and ethnicity at the state level. We report estimates only for states for which the sample size of these subgroups is large enough to create an accurate estimate. For this reason, the number of states included in our maps and data tables varies based on the analysis performed. The following analysis contains data on the first two quarters of 2021.
Our analysis of first- and second-quarter 2021 data finds a still-uneven recovery picking up its pace due in large part to the widespread availability of the COVID-19 vaccine. Recovery in the labor market has not brought with it racial equity, however the Hispanicwhite unemployment ratio rose from 1.6 in 2020Q4 to nearly 1.7 in 2021Q2, while the Blackwhite unemployment ratio returned to its historical trend of 2.0. That is, although the overall unemployment rate fell, Hispanic workers were still nearly 70% more likely to face unemployment than white workers, while Black workers were twice as likely to face unemployment as white workers. This suggests that a return toward normalcy alone will not be enough to close racial gaps in the labor market.
How Unemployment Tracks Recessions
Unemployment tracks the business cycle. Recessions cause high unemployment. Businesses lay off workers and jobless workers have less to spend as a result. Lower consumer spending reduces business revenue, which forces companies to cut more payroll. This downward cycle is devastating.
The highest rate of U.S. unemployment was 24.9% in 1933, during the Great Depression. Unemployment remained above 14% from 1931 to 1940. It remained in the single digits until September 1982 when it reached 10.1%. During the Great Recession, unemployment reached 10% in October 2009.
The government steps in when unemployment exceeds 6%. The Federal Reserve uses expansionary monetary policy to lower interest rates. Congress uses fiscal policy to create jobs and provide extended unemployment benefits.
The unemployment rate falls during the expansion phase of the business cycle. The lowest unemployment rate was 1.2% in 1944.
It may seem counterintuitive to think unemployment can get too low, but it can.
The Federal Reserve says that the natural rate of unemployment falls between 3.5% and 4.5%. If the rate falls any lower than that, the economy could experience too much inflation, and companies could struggle to find good workers that allow them to expand operations.
If youre looking for work after a recession, youll find the going is still tough. It might take several months before the unemployment rate falls.
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How Is Us Unemployment Data Collected
Official U.S. employment statistics are produced by the BLS, an agency within the Department of Labor. Every month the Census Bureau, part of the Department of Commerce, conducts the Current Population Survey using a sample of around 60,000 households, or around 110,000 individuals.
These surveys are conducted in person or over the phone. The responses are categorized by race, ethnicity, age, veteran status, and gender, all of whichalong with geographyadd nuance to the employment data. The sample is rotated so that 75% of the households are constant from month to month and 50% are from year to year.
History Of Unemployment In Canada
Unemployment has risen on average since the mid-1960s, both in absolute numbers and as a percentage of the labour force . Annual average unemployment rates of 3 to 5 per cent were common before 1958 and from 1964 to 1969. From 1958 to 1963 and in the early 1970s, 5 to 7 per cent rates prevailed.
Over most of the post-1975 period, employment also grew, but the labour force grew even more rapidly so that the number and fraction that were unemployed rose. During the recession of the early 1980s , the unemployment rate jumped. In August 1981, employment declined, as did labour-force participation and the fraction of the working-age population that was employed . The unemployment rate rose steadily over the period to December 1982, reaching 13.1 per cent. This is thought to be the highest rate of unemployment since the Great Depression, when the unemployment rate peaked at 19.3 per cent. The unemployment rate was gradually reduced to about 7 per cent in the late 1980s, but rose sharply again during the recession of the early 1990s, peaking at 12.1 per cent in November 1992.
After the recession of the early 1990s , employment recovered slowly, and, as a result, a drop in the unemployment rate was delayed until 1994. Strong employment growth from 1997 to 2000 brought the unemployment rate down to 6.8 per cent in January 1999. Unemployment spiked again briefly in the early 2000s, before resuming its decline in September 2003.
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Difference Between The Unemployment And Jobs Reports
The unemployment rate and figures from the jobs report don’t always tell the same story because they are taken from two different surveys.
The unemployment rate is taken from the household survey of individuals. It describes who is employed and who isn’t based on their responses.
The number of jobs added is taken from the establishment report, more commonly called the nonfarm payroll report. This survey of businesses describes how many jobs were created or lost by industry.
Since these reports are taken from completely different sources, the number of unemployed doesn’t match the number of jobs lost. Those discrepancies are expected, and the estimates are revised each month as more data comes in.
Us Unemployment Rate 1991
- U.S. unemployment rate for 2020 was 8.31%, a 4.64% increase from 2019.
- U.S. unemployment rate for 2019 was 3.67%, a 0.23% decline from 2018.
- U.S. unemployment rate for 2018 was 3.90%, a 0.46% decline from 2017.
- U.S. unemployment rate for 2017 was 4.36%, a 0.51% decline from 2016.
|U.S. Unemployment Rate – Historical Data|
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Alternative Measures Of Unemployment
In response to concerns that the official rate does not fully convey the health of the labor market, the BLS publishes five alternative measures: U-1, U-2, U-4, U-5, and U-6. Though these are often referred to as unemployment rates , U-3 is technically the only unemployment rate. The others are measures of “labor underutilization.”
Prince Edward Island Unemployment Rate
View Table for unemployment rate in Prince Edward Island
Year Unemployment rate
Due to the pandemic, Nova Scotias Canada unemployment rate rose from 7.4% in 2019 to 9.8% in 2020. Consequent upon that, many people lost their jobs.
However, Nova Scotia is still among the provinces with the lowest unemployment average in Atlantic Canada. Although it was above those of the remaining provinces, except for Alberta.
Basically, the unemployment rate in Nova Scotia is higher among males. However, the unemployment rate for females increased by 2.7 % from 6.3% in 2019 to 9.0% in 2020.
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Current Unemployment Rates For States And Historical Highs/lows
Note: Rates shown are a percentage of the labor force. Data refer to place of residence. Seriesbegin in January 1976. Historical highs and lows show the most recent month that a rate wasrecorded in the event of multiple occurrences. Estimates for at least the latest five years aresubject to revision early in the following calendar year. Estimates for the current month aresubject to revision the following month.
September 17, 2021
A0: Summary Of Employment Unemployment And Economic Inactivity For People Below State Pension Age
Labour market summary for people below state pension age. Estimates in this table follow the incremental increase in the female state pension age each quarter. These estimates are not the headline labour force survey estimates – they are shown at Tables A02 SA and A02 NSA. This table is updated four times a year in February, May, August and November. These estimates are sourced from the Labour Force Survey, a survey of households.
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Examples Of Unemployment Rate Formula
Lets take an example to understand the calculation of the Unemployment Rate in a better manner.
Unemployment Rate Formula Example #1
Let us take the example of the residents of the US to explain the concept of the unemployment rate. In the year 2018, around 155,761 thousand US residents were employed, while around 6,314 thousand were unemployed. Calculate the unemployment rate in the US for the year 2018 based on the given information.
The unemployment Rate is calculated using the formula given below
Unemployment Rate = No. of Unemployed Persons /
- Unemployment Rate = 6,314 /
- Unemployment Rate = 3.9%
Therefore, the unemployment rate in the US during the year 2018 stood at 3.9%.
Unemployment Rate Formula Example #2
Let us an example of a country to understand the other intricacies of the unemployment rate. Let us assume that the information pertaining to the employment status of the country is available as on December 31, 20XX.
Based on the given information, calculate the unemployment rate of the country as of December 31, 20XX.
No. of Unemployed Persons is calculated using the formula given below
No. of Unemployed Persons = Non-Institutionalized Civilian Population Volunteers Discouraged Workers Not Actively Seeking Jobs During Last 4 Weeks No of Employed Persons
- No. of Unemployed Persons = 1,500,000 50,000 170,000 40,000 1,150,000
- No. of Unemployed Persons = 90,000
Not Seasonally Adjusted Data
Virginias unadjusted unemployment rate fell by 0.3 of a percentage point in August to 3.8 percent, and was down 3.3 percentage points from a year ago. Compared to a year ago, the number of unemployed decreased by 150,520, household employment increased by 14,765, and the labor force decreased by 135,755. Virginias not seasonally adjusted unemployment rate continues to be below the national unadjusted rate, which declined by 0.4 of a percentage point in August to 5.3 percent.
Compared to last month, the August unadjusted workweek for Virginias 154,800 manufacturing production workers decreased by 1.9 hours to 39.9 hours. Average hourly earnings of private-sector production workers increased by $.53 to $21.59 in August and average weekly earnings decreased $18.87 to $861.44.
The statistical reference week for the household survey this month was the week of August 8-14, 2021.
The Virginia Employment Commission plans to release the April local area unemployment rates on Wednesday, September 29, 2021. The data will be available on our website www.VirginiaWorks.com. The September statewide unemployment rate and employment data for both the state and metropolitan areas are scheduled to be released on Friday, October 22, 2021.
Files detailing August’s unemployment numbers are available below: