Unemployment is a key indicator of the health of a country’s economy and can be used to identify economic problems. It is an important factor when making decisions about monetary policy and other strategic economic issues. High unemployment can negatively affect people’s quality of life, as it reduces the amount of disposable income they have available to spend on goods and services. It can also discourage people from continuing their education or pursuing new jobs because they believe they will not be able to find employment.
There are many different ways to calculate an unemployment rate, but the most common is dividing the number of unemployed workers by the total labor force. This statistic has its own drawbacks, as it leaves out people who are not actively looking for work—such as students and homemakers. It can also overlook people who have stopped seeking employment because they are no longer interested or because they think they will never find a job. These are known as “discouraged workers” and they can have a negative effect on the economy.
In the United States, the Bureau of Labor Statistics (BLS) uses a monthly survey to produce the country’s unemployment rate. This survey, called the Current Population Survey, includes a sample of about 60,000 households and about 110,000 individuals. To qualify as unemployed, a person must not be currently employed and must have looked for work in the past four weeks. Other criteria include being able to start work, not being too sick to work and being willing to accept any job, even if the pay is less than ideal.