How unemployment is measured
Six official rates, and who each one counts
What each rate counts
The Bureau of Labor Statistics publishes six measures of labor underutilization. Each adds a broader group of people, so the rates stack in order.
- U-3 (the headline): people with no job who actively looked for work in the past four weeks.
- U-4: U-3 plus discouraged workers — those who want a job but stopped looking because they believe none is available.
- U-5: U-4 plus the rest of the marginally attached — people who want a job and have looked sometime in the past year, but not in the past four weeks.
- U-6: U-5 plus part-time workers who want full-time work.
- Labor force participation rate: the share of the population that is either employed or unemployed (in the U-3 sense) — it doesn't depend on whether anyone is looking for work.
- Employment-population ratio: the share of the population that is employed — it doesn't depend on whether anyone is looking for work.
Quick facts about the survey
The monthly employment report comes from a survey of about 60,000 households. Some rules of thumb about what counts:
- One hour of paid work in the reference week (the week containing the 12th of the month) counts as employed.
- Unpaid work for a family business also counts as employed.
- A person who stops looking for work leaves the labor force and is no longer counted as unemployed in U-3.
- The difference between the U-3 and U-6 numbers reflects people who are attached to work but underemployed or discouraged.
- Which rate is published as the headline is a convention, not a legal requirement.
- The survey has a sampling margin of error, so month-to-month changes in small subgroups are often not statistically significant.
The employment rate by sex and age
The employment-population ratio is often broken out by sex and age. These figures count whether people have jobs, not whether they are searching, so they are unaffected by the definitional questions above.
- The 25 to 54 bracket is standard 'prime-age' because most schooling is finished and retirement has not begun.
- The 20 to 24 figures are held down by full-time study, which counts as not employed.
- Men and women are shown separately because being out of the labor force means different things across the two populations, for reasons including caregiving.
Common questions
What is the difference between U-3 and U-6 unemployment?
U-3 is the official unemployment rate: people who are jobless, actively looked for work in the past four weeks, and are available. U-6 adds discouraged workers, the rest of the marginally attached, and part-time workers who want full-time work but can't find it. U-6 is always higher than U-3, and the gap shows how many people are underemployed or have given up looking.
Why is the labor force participation rate important?
The labor force participation rate is the share of the civilian noninstitutional population that is either employed or actively looking for work. It matters because it shows what fraction of the adult population is engaged in the labor market at all. A falling participation rate can mean people are retiring, going back to school, or getting discouraged and dropping out, which makes the headline unemployment rate look lower than the true level of joblessness.
How does the government count someone as employed?
In the monthly household survey, anyone who did at least one hour of paid work during the reference week—the week containing the 12th of the month—is counted as employed. Unpaid work for a family business also counts. This is a low bar, so marginal jobs count, and part-time workers who want more hours are still counted as employed.
What happens to the unemployment rate when someone stops looking for work?
When someone who was unemployed stops actively searching, they leave the labor force, so they are no longer counted as unemployed. The unemployment rate falls as a result, even though the person is still jobless. That's why the labor force participation rate is important to look at alongside the unemployment rate.
Why are the employment rate numbers for 20 to 24 year olds lower?
The employment-population ratio for 20 to 24 year olds is typically lower than for older prime-age workers because many people in that age range are full-time students. Full-time study counts as not employed, even if the person is working part-time or wants a job. So the ratio is dragged down by schooling, not necessarily by lack of jobs.
Reference material, written with AI assistance and based on SEC rules and filing practice. Informational only, not investment or legal advice. Filing requirements change — check the SEC's own guidance for anything consequential.