How to Calculate Unemployment Rate

The unemployment rate is a calculation which measures the standard of a particular economy. It is the percentage of employable people in a country’s workforce who are over the age of 16 and who have either lost their jobs or have unsuccessfully sought jobs in the last month and are still actively seeking work.

The main scope of this article is to explain the method to calculate unemployment rate. You can read more about unemployment rate here.

How to Calculate Unemployment Rate

There are several ways to calculate unemployment rate of a population. These calculations depend on the definitions of “unemployed” and “employed” and the methods of data collection.

The Bureau of Labor Statistics (BLS) defines unemployed individual using the following four criteria: 

  • Age 16 years or older but not doing a job
  • Are not involved in any employment (self or otherwise)
  • Have put specific effort to find a job at any time during last four weeks.
  • Able to do a job in last four weeks

There are also a few other factors you should be aware of when calculating the unemployment rate of a population.

How to Calculate Unemployment Rate

Formula to Calculate Unemployment Rate

The employment rate can be calculated using the following formula. 

 Unemployment Rate = Number of Unemployed People / Labor Force

We can calculate this by an example.

Following data are from the labor department of a certain country

Non-institutionalized civil population                          2,436,876

Employed population                                                    1,767,549

Discouraged people                                                            38,867

Volunteers                                                                          15,350

To calculate unemployment rate, first we should find the unemployed civil population through this data.

Non-institutionalized civil population                        1,756,404

Employed population                                                     1,591,333

Discouraged people                                                           50,303    

Volunteers                                                                           25,451

Unemployed population                                                  89,317

Unemployment Rate                                                    =   89,317/(1,756,404+ 89317)

                            = 5.31%

Conclusion

Employment is the primary source of personal income for many people in the world. It has an impact on the consumer spending, standard of living and overall economic growth. Thus, unemployment rate is a good indicator to measure the country’s economic condition

Image Courtesy:

“Unemployment Rate of Japan 1953-2009″By Swcfer – Own work (Public Domain) via

About the Author: G.Perera


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