Unemployment rate is the percentage of people out of work as a share of total population. The government keeps track of unemployment through a monthly survey, the Job Openings and Labor Turnover Survey (JOLTS), which asks a random sample of households questions about whether their members have jobs or are looking for one. The Bureau of Labor Statistics uses the JOLTS data to publish monthly employment reports.
Typically, the economy experiences periods of high and low unemployment. When unemployment is high, consumers are unable to spend money on goods and services, which reduces business revenues and forces companies to lay off workers. This contraction of the economy can continue until government steps in with expansionary monetary policy or other fiscal measures.
To be counted in official unemployment figures, a person must not only not have a job, but must also be actively searching for work. This is because the government is interested in measuring only those who are out of work, rather than all the people who do not have a job but do not want to look for one.
The official unemployment rate, known as U-3, is calculated from the JOLTS data by adding up all those unemployed for 15 weeks or longer. Other measures of unemployment include the U-1 rate, which counts individuals who have been out of work for less than 15 weeks; the U-2 rate, which includes those who lost their jobs or completed temporary work; the U-4 rate, which counts discouraged workers and those who give a reason for not being looking for employment; and the U-5 rate, which includes the previous categories plus those who are marginally attached to the workforce (that is, they would like a job but have not searched in the past four weeks).
In addition to reporting the unemployment rate, the BLS produces a variety of other related employment statistics. These can be broken down by various characteristics, including race and ethnicity, educational attainment, industry, age, and region.