Reading and understanding employment rates can be confusing, and even alarming. But these numbers are just one part of the job market, and learning how to interpret them can help you navigate the employment world.
The U.S. Department of Labor (DOL)’s Bureau of Labor Statistics (BLS) collects data from businesses and individual households to track unemployment, worker demographics, and a number of other market indicators. It releases this data every month — titled The Employment Situation — to give employees and companies alike a better idea of how the economy stands.
If you’re a business owner or worker, the current unemployment rate offers valuable insights about your job potential. Here’s how to interpret those numbers and learn what they mean for you and the world around you.
How does the unemployment rate affect the economy?
Phenomena like frictional unemployment contribute to the regular ebb and flow of the economy, to a point where trends are easier to spot.
In the 1950s, economist A.W.H. Phillips founded the Phillips Curve, a pattern that represents this relationship between employment and inflation. Curve found that when unemployment is high, wages tend to plateau. Unemployed people then contribute less to the economy because they typically have less to spend.
When unemployment lowers, businesses tend to raise wages quickly to attract job seekers and staff up their organizations. And when the rate is too low, prices of consumer goods and services tend to inflate.
As for the unemployment rate’s effects on governing bodies, The Federal Reserve uses the rate to raise and lower interest. When unemployment is high, the Federal Reserve generally lowers interest rates to encourage business owners and individuals to invest and spur economic growth.
On the other hand, when unemployment is low, the Federal Reserve often kicks up interest to lessen the blow of inflation, making it more difficult to take out loans.
To summarize: low unemployment rates usually lead to inflation, a more competitive job market, and steeper interest on federal loans. High unemployment rates usually cause the economy to slow and then speed up again as businesses and organizations compensate.
Who collects unemployment information and how?
The U.S. Census Bureau — under the BLS — conducts a monthly national household survey called the Current Population Survey (CPS) to measure employment rates, average hourly earnings or salaries, and other worker demographics.
The CPS pulls from a sample set of 60,000 eligible U.S. households, or roughly 110,000 individuals. Most public opinion surveys usually poll fewer than 2,000 people, so this is a generous sample size.
The sample groups every county and independent city into geographic sampling units to best represent the U.S. population. From roughly 2,000 units, the CPS chooses 800 to represent a cross-section of urban, rural, and industrial geographic divisions of each state (including the District of Columbia and Island Areas).
No sample size can measure unemployment with the same accuracy as a total population census. But according to the BLS, these unemployment numbers have a 90–100% chance of being within 300,000 of the real figure, meaning the potential difference isn’t large enough to skew the results.
How does the CPS calculate the unemployment rate?
After completing the survey, the CPS divides the number of unemployed people by the number of people in the labor force. Then it multiplies that number by 100 to calculate the unemployment rate percentage.
Is the unemployment rate the same as a jobs report?
They’re two different things. The BLS conducts two different surveys to measure the unemployment rate and jobs reports:
Who is and isn’t considered a part of the labor force?
To understand employment statistics and their reflection on the U.S. economy, it’s important to consider who is considered part of the workforce.
According to the BLS, the labor force includes all people ages 16 and above who are either working or actively looking for work. It doesn’t include unemployed people who aren’t looking for a job, which could include students, retirees, and people with family responsibilities.
It also doesn’t count people who are institutionalized, incarcerated, or on active duty.
U.S. unemployment data: By the numbers
At the time of writing, the November 2023 Employment Situation was the most recent and reported on the December 2023 surveys. Here are some of the key findings from this report:
What’s the unemployment rate?
As of November 2023, the unemployment rate in America was 3.7%. A total of 6.3 million were unemployed. In general, the unemployment rate hasn’t fluctuated significantly since the beginning of 2022.
How long are people typically unemployed?
Around 18% of unemployed people are unemployed for 27 weeks or more.
How many workers struggle to find full-time work?
Around 4 million part-time workers struggle to find full-time work. This group is staying part-time for economic reasons, even though they prefer full-time employment. They either have reduced hours or can’t find better employment opportunities.
What’s the labor force participation rate?
The labor force participation rate measures the percentage of the population actively working or seeking work. The BLS calculates this rate by dividing the number of employed people by the number of eligible workers.
In November 2023, the labor participation rate was 60.5%. This percentage has stayed nearly the same since early 2022, and it’s still below the pre-pandemic numbers of February 2020. That means the rate still hasn’t quite recovered from the pandemic.
Labor market by the numbers
The November 2023 Employment Situation also reports on labor market information from the CES program. This takes statistics directly from businesses to gather the number of job openings or losses across all industries.
Here are some key takeaways:
Changes in hourly wages
In November 2023, average hourly earnings for employees rose by 12 cents to $34.10 — an increase of around 0.4% from November 2022.
Job market changes in various industries
There was overall positive job growth in November 2023, with around 199,000 new jobs in the economy.
The BLS found noticeably positive employment changes in leisure and hospitality, government, manufacturing, social assistance, and health services sectors. Both leisure and hospitality and government jobs are back above their pre-pandemic levels, and healthcare continues to trend upward, with expected growth of 13% between 2021–2031.
Employment declined in transportation and retail trade.
FAQ: Common questions about employment statistics
Not everyone is a statistics expert, and the BLS reports can be hard to interpret. Here are a few answers to common questions to help you better understand what these numbers mean:
Do unemployment benefits measure the U.S. unemployment rate?
The BLS surveys don’t factor in the number of people who collect unemployment insurance or other social assistance. Some people remain jobless when their benefits run out. The Employment Situation report only reflects the number of unemployed people looking for jobs, not the number of people receiving benefits.
Is all unemployment bad?
The economy is always experiencing some level of unemployment. High and low rates are what causes change. But some types of unemployment can signify a healthy economy.
High frictional unemployment — which accounts for the short unemployment period after you voluntarily leave a job for something new — is a sign of a strong economy with plenty of job opportunities. It also reflects evolving workforce standards.
The Great Resignation showed that employees are willing to take risks to gain better employee benefits and work-life balance.
What is the highest unemployment rate in U.S. history?
The U.S. didn’t begin collecting unemployment data until 1940, so it’s hard to say when unemployment was officially at its highest. However, the DOL estimates that 1933 was the worst year for joblessness in history. Historical data suggests that approximately 12,830,000 people — or about 25% of the labor force — were out of a job as a result of the Great Depression.
How unemployment rates could affect your job
Looking at overall trends or studying career outlook data can offer valuable insights about high-paying or high-security career paths. But job gains from a single report aren’t enough to give you an overview of the economy. That’s why it’s helpful to stay up-to-date and pay attention to industry news as the economy changes.
Knowing what the numbers are keeps you in the loop about recessions and economic crises and gives you the tools for self-awareness. While it’s also a good idea to find a job you love , strategically choosing a career with more job stability can help you feel safer from unemployment problems.
It’s normal to worry about finding the best job benefits for you, losing your job in an economic downtown, or recession-proofing your career. If the fear of getting fired or laid off is making you anxious, try talking to a career coach or venting to a friend. Chances are, you aren’t the only one feeling this way.
Understanding unemployment rates
Take the time to read the current unemployment rate carefully and analyze data against yearly trends.
It offers valuable information about strong and weak industries, potential career paths, and when to invest or cut back on spending. And even when the economy isn’t at its strongest, keep a positive mental attitude. You never know when things could change.
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