Explanation :The unemployment rate formula is calculated by dividing the number of unemployed individuals in the workforce by the total labor force. This main category of unemployed people is typically broken down into four different categories based on how they affect the economic system: structural, frictional, cyclical, and long-term. Structural unemployment describes a situation where there are too many workers with one set of skills and not enough jobs in the economy that need that set of skills. Frictional unemployment describes the time workers spend in between jobs. This is a temporary loss of work that occurs when someone quits a job before finding another.
In a nutshell :
- The unemployment rate is the proportion of the labor force that is not currently employed but could be.
- There are six different ways the unemployment rate is calculated by the Bureau of Labor Statistics using different criteria.
- The most comprehensive statistic reported is called the U-6 rate, but the most widely used and cited is the U-3 rate
- The U-3 unemployment rate for January 2022 was 4%