Unemployment Rate Calculator
Definition – What is the unemployment rate?
The unemployment rate measures the percentage of the labor force that is unemployed but actively seeking work. It reflects the overall health of an economy. A higher unemployment rate (e.g., above 7%) indicates economic difficulties, with fewer available jobs and reduced consumer spending. A lower rate (e.g., below 5%) suggests a strong economy with more job opportunities and greater demand for labor. Economists use these rates to evaluate economic conditions and shape policies accordingly.
Formula – How to Calculate the Unemployment Rate
Unemployment Rate = (Unemployed People ÷ People in the Labor Force) x 100%
Where:
- Number of Unemployed People includes individuals who are not employed but actively seeking work.
- Labor Force is the total number of people employed or actively seeking employment.
Example
If a country has 5 million people unemployed out of a labor force of 50 million, the unemployment rate would be:
Unemployment Rate = (5,000,000 ÷ 50,000,000) × 100 = 10%
This means 10% of the labor force is unemployed and looking for work.
Sources and more resources
- University of Minnesota – Principles of Macroeconomics – 5.3 Unemployment – A description of unemployment and how it is calculated.
- Wikipedia – Unemployment – An overview of unemployment. Includes how it is calculated.
- OECD Data – Unemployment Rate – country-specific data on the unemployment rate.