Calculate Unemployment Rate
It is very important for governments to be able to determine what percentage of their population is unemployed in order to determine steps to alleviate unemployment and assist those without work. However, the unemployment rate of a population can be calculated in several ways. This calculation depends on how the terms "unemployed" and "employed" are defined and applied and how the data is collected. There are a few other nuances you should be aware of when calculating the unemployment rate of a population.
Contents
Steps
Calculating the Federal Unemployment Rate
- Find the number of unemployed people. "Unemployed" people are defined by the federal government as people who are able to work and who have actively looked for work in the last four weeks.
- Actively looking for work fits a broad category that includes having contacted an employer directly with a resume or through an interview, going to a public or private employment agency, asking friends or relatives for work opportunities, going to a school employment center, placing advertisements looking for work, or filling out job applications.
- People who are unemployed, but who have stopped looking for work because they don't believe they can find one in their line of work, they were previously unable to find work, or because they feel they are too old, or too inexperienced to work, are considered to be "marginally attached to the labor force" and are therefore not considered to be part of the labor force.
- The federal government finds this number through surveying 60,000 US households every month.
- Find the number of employed people. The employed population of a nation is accounted for by people who have full-time jobs. They are also considered to be employed if they are self-employed, if they work part-time, or if they work for a family business for more than 15 hours a week, even if the work is unpaid. People who are on maternity or paternity leave, on sabbatical, or on vacation from work are also considered employed because they do have a job to come back to.
- Even if a person is employed part-time or works in a job below his or her pay grade, that person is still considered to be employed.
- The federal government also finds this number through surveying 60,000 US households every month.
- Remove people who are not considered to be in the labor force. People who are not part of the labor force are people who are not actively looking for work or people who are otherwise occupied, whether they are students, homemakers, or disabled. People who are not part of the labor force include people under 16 years of age, people in institutions, such as prisons and nursing homes, people in the armed forces, people who are retired, students, and the disabled.
- It's important to know which people are not considered to be part of the labor force so that you don't mistakenly count them as part or not part of the labor force and skew the equation.
- Divide the number of unemployed people by the total number of employed and unemployed people. For example, if we have 4 million unemployed people and 40 million employed people, we can divide 4 by 44 and get a decimal of .09.
- Note that, when calculating the real unemployment, the figure will not be so nice and neat.
- You may notice that the original numbers were in millions but we dropped all the zeros, choosing just to divide the prefixes. If you divide the numbers with their full digits in the millions you will actually get the same exact decimal. Try it, you'll see!
- Multiply the decimal number by 100 to get the percentage. This calculation is as easy as moving your decimal point two spaces to the left, for example converting .09 into 9%.
- Find the employment rate by subtracting this number from 100. If you want to take it a step further and would like to find out what the employment rate is, then all you have to do is take the unemployment rate and subtract it from 100.
- So, for example, 100 - 9 = 91. This means that the employment rate of our fictional land is 90%, or that 90 percent of the people who are able to work and able to find work have found it. That sounds a bit nicer, doesn't it?
Calculating Alternative Measures of Unemployment
- Find the number of employed and unemployed people using the federal standards. You can use the federal bureau of labor statistics numbers, which are calculated through a survey of 60,000 households every month.
- As stated in method one, the number of unemployed workers does not include all those without work, but instead only counts those that have "actively" looked for work in the last four weeks and fit other specific parameters outlined by the federal government.
- Calculate the federal unemployment rate. In order to calculate this percentage you will need to calculate the federal unemployment rate by dividing the number of people who are actively seeking employment, but who cannot find a job, by the total number of people who are employed and those seeking employment. Follow method one to complete this calculation.
- Calculate alternative unemployment percentages. The federal unemployment rate does not give the full picture of the true number of people who do not have an employment. A person who has not actively sought work in 4 weeks, even if he has thought about it or even perused ads about it, does not count as unemployed, and is considered not part of the labor force. If you would like to calculate a more accurate percentage of people who are without work you will need to add some of those not included in the federal calculation.
- To calculate those who are unemployed but who have not searched for a job in the last four weeks, the percentage should only include those that want and are available for work, as opposed to those that are permanently unemployed, such as the retired.
- The US Bureau of Labor Statistics makes this type of data available on their website, in addition to the more traditional data they use for calculating unemployment. It can be accessed at: http://www.bls.gov/news.release/empsit.t15.htm
- Add the alternative unemployment percentage to the federal unemployment rate. This number gives a fuller picture of the percentage of people who are without employment.
- This total is available on the bureau of labor statistics website at: http://www.bls.gov/news.release/empsit.t15.htm.
Tips
- Remember that the employment rate of a country tends to fluctuate, especially during times of economic crisis or boom.
- In the United States the data regarding the unemployment rate, based on monthly surveys given to a wide sample of the population (though not the entire population, obviously) is released every month. The Bureau of Labor and Statistics (BLS) is responsible for conducting these household surveys.
- A person has to be at least 16 years old to be considered employed or unemployed.
- Find up to the date information on the US unemployment rate at http://www.bls.gov/news.release/empsit.toc.htm.
