The unemployment rate is the percentage of the labor force that is unemployed. It is a lagging economic indicator that rises or falls with changing economic conditions. The rate is measured each month by the Bureau of Labor Statistics (BLS). The BLS releases its monthly employment report on the first Friday of every month for the previous month. The report is widely monitored as a key indicator of the health of the economy and its relationship to inflation and the stock market. The number of people employed and jobless are based on household labor force surveys, which are the most comprehensive source of employment data. The BLS also reports other measures of labor underutilization that include discouraged workers and marginally attached workers. LISEP’s True Rate of Unemployment includes these groups in its calculation to provide a more complete picture of the state of the economy.
While economists and policy makers differ on the causes of unemployment, most agree that it comes in three categories: frictional, structural and cyclical. Frictional unemployment is the result of a temporary transition between jobs. It can occur when workers leave their jobs for better pay or a more suitable position, as workers who move to different locales, or due to family and personal reasons. The frictional category also includes individuals who are reentering the workforce after leaving it temporarily, such as recent college graduates or empty nesters returning to work.
Structural unemployment is the result of changes in an industry. Advances in new technology can cause older industries to lose business and lay off employees. For example, the decline of newspaper sales caused by the advent of web-based advertising caused many journalists, printers and delivery workers to lose their jobs. This type of unemployment also affects the economy because the individuals who are laid off are not spending money or contributing to its growth.