The unemployment rate is the ratio of unemployed people to total people in the workforce.
It does not include people who are not in the workforce (children, seniors, and people unable to work or not seeking employment).
A low unemployment rate means that few people are searching for work. A high unemployment rate means that more people are searching for work.
Unemployment Rate = (Unemployed People ÷ People in the Labor Force) x 100%
- Unemployed people are people who do not have a job and are searching for employment.
- People in the labor force are all people working or searching for employment. Do not include people not in the workforce, such as children, seniors, people unable to work, or people not seeking employment.
There are 100,000 unemployed people, and the labor force is 5,000,000 people.
Unemployment Rate = (100,000 ÷ 5,000,000) = 0.02 x 100% = 2.0%
The unemployment rate is 2.0%.