Definition
The unemployment rate is the percentage of the labor force that is unemployed. A person is unemployed if they did not work at all during the survey week, were available to work, and actively looked for a job in the previous four weeks (or are waiting to be recalled from a layoff). The official headline rate is called U-3.
How it works
Unemployment rate = unemployed ÷ (employed + unemployed) × 100
The numbers come from the Current Population Survey, a monthly interview of about 60,000 households, released with the jobs report. People who are not working and not looking – retirees, students, parents at home, or people who have given up – are outside the labor force and not counted at all. That is why the rate can fall when discouraged job seekers stop searching.
The broader U-6 rate adds people who want a job but have stopped looking, and part-timers who want full-time work. It is always several points higher than U-3.
Example
Imagine a town of 10,000 adults. 6,000 have jobs, 300 have none but are looking, and 3,700 are retired, studying or not looking. The labor force is 6,300 and the unemployment rate is 300 ÷ 6,300 = 4.8%. If 100 of the job seekers give up, the rate drops to 200 ÷ 6,200 = 3.2% – although nobody found a job.
Unemployment rate in history
Readings at turning points, taken from the same data as the chart above.
| Date | U-3 | U-6 | What was happening |
|---|---|---|---|
| May 1953 | 2.5% | – | Record low during the Korean War boom. |
| May 1969 | 3.4% | – | End of the long 1960s expansion. |
| Nov 1982 | 10.8% | – | Highest since the 1940s at the time, after the Volcker recessions. |
| Apr 2000 | 3.8% | 6.9% | Peak of the dot-com boom. |
| Oct 2009 | 10.0% | 17.1% | Great Recession peak. |
| Apr 2020 | 14.8% | 22.9% | Pandemic: highest since the series began in 1948. |
| Apr 2023 | 3.4% | 6.6% | Lowest since 1969. |
| Sep 2026 | 4.2% | 7.6% | Latest reading. |
Monthly values. Explore every month on the US Unemployment Rate chart.
Common mistakes
- “Unemployment counts everyone without a job.” Only those actively looking. Someone who stops searching leaves the labor force and is no longer counted as unemployed.
- “It is based on unemployment benefit claims.” It comes from a household survey. Many unemployed people never claim benefits, and the weekly jobless claims report is a separate series.
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Unemployment rate: questions and answers
What is full employment?
The lowest unemployment rate consistent with stable inflation, sometimes called the natural rate. Estimates have been around 4% to 4.5% in recent years, but it cannot be measured directly.
What is the Sahm rule?
A recession signal that is triggered when the 3-month average unemployment rate rises half a point above its lowest level of the previous 12 months. See the Sahm rule chart.