The unemployment rate is a key economic indicator that provides an insight into the health of the labor market and helps policymakers to make informed decisions about steering the economy and countering unemployment. Nevertheless, the unemployment rate is not a precise measure of unemployment and is subject to various interpretations of who counts as unemployed.
The U-3 statistic, published by the Bureau of Labor Statistics (BLS), defines jobless people as those who are not employed and actively looking for work. It does not count those who would like to work but are unable to do so, for example because of disabilities. The U-5 statistic is more comprehensive and includes discouraged workers as well as those who are working part-time for economic reasons but who would prefer full-time work. The BLS also publishes a U-6 statistic that incorporates all of these groups plus those who have given up searching for employment.
Several other countries produce national unemployment rates, but these tend to have different methodologies and are not comparable. For instance, some countries only include those who want to work but are not employed while others only consider those who have looked for a job in the past four weeks. Moreover, there are a variety of other factors that may affect the unemployment rate such as the strength or weakness of demand for labor and whether there is a shortage of skilled labor in specific fields. Therefore, it is important for policymakers to understand how each country measures and reports the unemployment rate so that they can compare unemployment rates across countries.