Is the unemployment rate based on the number of people who are currently collecting unemployment payments? If not, what other factors are included?
In: Economics
It depends on which rate you are talking about – there are multiple unemployment rates that the government calculates.
The one we typically discuss – U3 – is defined by the Bureau of Labor Statistics as people who do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. So, for example:
– Someone who was laid off and is looking for work would be unemployed.
– A stay-at-home parent would not be unemployed.
– Someone who was laid off and is driving for Uber would not be unemployed.
– Someone who is discouraged and hasn’t sent out a resume in 2 months would not be unemployed.
For that reason, many economists don’t like U3 as it can undercount the true unemployment and under-employment rates. U6 extends the job search window to 12 months and factors in people who are under employed as well.
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