Unemployment rate reflects many factors

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Sunday, February 27, 2011
— Just what is the unemployment rate?

At its most basic level, itís the number of jobless people expressed as a percentage of the total labor force.

Each month, itís calculated for a variety of geographic areas, including Metropolitan Statistical Areas such as Janesville.

Source of information

Each month, the U.S. Census Bureau contacts households nationwide as part of its Current Population Survey. The bureau asks a series of questions to determine the employment status of people in the household.

That data is fed into a report called the ďThe Employment Situation,Ē which is published each month and includes a table that lists six measures of unemployment.

The most conservative measure is U-1, and the most liberal is U-6.

The official unemployment rate for any given geographical area is U-3, which falls near the middle of the continuum.

Like other economic statistics, the rates are based on statistics from a relatively small sample and, therefore, are not exact.

The calculation

For purposes of the official unemployment rate, respondents are lumped into three basic categories based on their answers to the survey questions.

The U.S. Department of Labor, through its Bureau of Labor Statistics, is responsible for calculating and publishing the monthly rate with input from state agencies.

The categories are:

-- Labor force: This includes working people 16 and older and those who are unemployed and looking for work.

If someone is neither working nor looking for work, they are not in the labor force.

-- Unemployed: These are people who donít have a job, are available for work and have tried in the last four weeks to get a job.

Despite popular opinion, the government does not define unemployment by whether someone is receiving weekly unemployment compensation.

In fact, the federal survey does not include a question about unemployment insurance benefits.

-- Employed: People who worked at least one hour for pay somewhere or for 15 unpaid hours in a family-run business.

The official unemployment rate is then calculated by dividing the number of unemployed by the labor force. It is expressed as a percentage.

Last updated: 4:12 pm Thursday, December 13, 2012

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