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How Is the National Rate of Unemployment Determined?

Jobless individuals who are currently seeking work are included on the national rate of unemployment.
The national unemployment rate is determined by the Bureau of Labor Statistics.
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  • Written By: Toni Henthorn
  • Edited By: W. Everett
  • Last Modified Date: 02 October 2014
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The Bureau of Labor Statistics (BLS), a division of the United States Department of Labor, issues the national rate of unemployment each month, which states the total number of persons and percentage of the unemployed civilian labor force during the previous month. In order to generate these figures, the government conducts a national, monthly current population survey (CPS), which consists of a sample of approximately 110,000 persons in about 60,000 households. Each month during the week containing the 12th day of the month, interviewers from the Census Bureau collect information from each household, including a list of household members, dates of birth, gender, race, ethnicity and educational level. The examiner also compiles data on the labor status of each household member above the age of 16 and classifies them into one of three classifications, employed, unemployed, or not in the labor force. After gathering the information, the bureau extrapolates and weights the numbers with respect to race, gender, ethnicity, age, and residential state to reflect the proportions found in the entire United States, from which the agency derives the national rate of unemployment.

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The Census Bureau selects each CPS unit carefully to provide a representative cross sampling of the entire United States (US) population. After dividing the US into approximately 2,025 geographic divisions, the agency chooses 824 areas to include in the sample, making sure that it encompasses all states, as well as a wide range of industries, farms, rural, and urban settings. Each household in the sample provides information for four consecutive months, then rotates off the sample for eight months, and switches back on the sample for four more months, providing comparable data to the preceding year. In any given month, 25 percent of the households in the CPS changes, while 75 percent of the sample provides a national rate of unemployment comparable to the previous month with about 50 percent comparable to the previous year. The monthly national rate of unemployment has 90 percent accuracy with a margin of error of 0.04 percentage points.

Computers of the BLS strictly interpret and assign the labor force classifications of sampled individuals. A person is employed if he engaged in any work at all, regardless of whether the work is temporary, part-time, or full-time, paid, or unpaid, during the sample week. This designation also includes workers who did not work during the sample week but have jobs, such as those on maternity leave, vacation, sick leave, and on strike. Unpaid workers who contribute at least 15 hours of service to a family-owned business also fall into this category. Institutionalized persons, such as prisoners, and military personnel are not included in the employment figures.

The ranks of the unemployed, from which the national rate of unemployment is produced, include those who are currently jobless but are available for work. In order to meet the definition of an unemployed person, an individual must have actively sought work during the four weeks before the sample week. Active job-seeking may include contacting an employment agency, getting in touch or interviewing with a potential employer, forwarding resumes, and responding to job advertisements. The BLS also assigns workers on temporary furloughs or layoffs to this category. This definition does not include discouraged jobless workers who have not engaged in active job-seeking activities within the last four weeks.

Persons without jobs who are not currently looking for work fall into the designation, "not in the labor force." A stay-at-home mother, a disabled individual, or a discouraged worker with long-term unemployment may fit this category. Those individuals who have sought jobs within the previous 12 months are further designated as "marginally attached to the labor force." Since the BLS assigns an individual to only one category, the bureau places a priority of any form of labor activity. For example, an unemployed teacher who works part-time at a fast-food franchise is considered employed, although she considers herself seriously under-employed.

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