How to Calculate Unemployment Rate

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By Paul McDaniel
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Unemployment in 1837

With all the recent news and talk concerning the downturn in the national and global economy, people are also discussing the potential for increased unemployment. But exactly how is an unemployment rate for a particular area determined? Well, this article will show you how to calculate an unemployment rate for a particular area or region.

Difficulty: Easy

Instructions

Things You'll Need:

calculator

Step 1

To calculate the unemployment rate for a particular area or region, you will need to know the number of unemployed workers and the total number of people in the labor force in the particular area (such as a state or country). In the United States, this data is available from the Bureau of Labor Statistics. Labor Force refers to the number of people of working age and below retirement age who are actively participating in the work force or are actively seeking employment. Note that the total population of the area or region is irrelevant when calculating the unemployment rate.
Step 2

The formula for calculating the unemployment rate (expressed as a percent) is as follows:
Unemployment Rate = (Unemployed Workers / Total Labor Force) * 100
Step 3

For example: A small country has a population of 15,000 people. Of the total population, 12,000 people are in the labor force and 11,500 people are employed. What is the unemployment rate? First, find the number of unemployed by subtracting the number of employed (11,500) from the labor force (12,000). So, 12,000-11,500=500. Therefore, 500 people are unemployed. Now, to find the unemployment rate, plug the numbers into the formula: Unemployment Rate = (500/12,000)*100 = 4.2 percent.