An important indicator of the health of an economy, the unemployment rate measures the proportion of people without paid work. It is one of the most closely watched economic indicators, and a high unemployment rate can depress consumer spending and investor confidence. It can also lead to higher inflation and higher interest rates, making it more expensive to finance projects and pay mortgages.
To calculate the unemployment rate, the government divides the number of jobless people by the total labor force, a figure that includes those who are employed or looking for a job. Only residents of the country are counted, and those who are out of the workforce are excluded (this excludes retirees and those who have dropped out of school to look for a job). The survey used by most countries to generate employment statistics is the Current Population Survey, conducted monthly by the Bureau of Labor Statistics. The survey collects information about the industry and occupation of a person’s last job, how long they have been jobless, and their reason for leaving the workforce. It also collects information about people who are working part time but would like to have full-time jobs, and about those who are marginally attached, or want to work but have given up looking for work.
Other employment statistics are generated by using payroll data from businesses and government agencies. These statistics include the number of new jobs created, average weekly hours worked, and the hourly, weekly, and annual earnings of those who are employed.