How to Calculate Unemployment - YouTube

today we're going to continue our discussion about unemployment

we're going to talk about one of my favorite days of the month

usually on a Thursday night I can't get to sleep in anticipation

for this Friday

one of my favorite days of the month is Jobs Friday

Jobs Friday is the first Friday of every month it's when the Bureau of Labor

Statistics announces the unemployment rate for the

previous month

the BLS is responsible for making sure the unemployment rate is accurately

reported reported consistently and reported

frequently understanding what happens in labor

markets allows us to have a better idea of what's happening in the overall economy

during the month the BLS samples sixty thousand households

in two thousand different geographic regions

these households are made up of roughly 110,000 individuals every month

the BLS replaces a quarter of the households

and no household can be in the data more than four consecutive months

based on the answers of the survey the BLS estimates this

total number of people unemployed in the U.S.

and what the unemployment rate is then using this information the BLS

calculates several measures of unemployment the most popular one that

is tracked is the u3 unemployment rate economists

actually track several measures of unemployment and

that's how the unemployment data is collected

the BLS uses this data to separate people into different categories

the total U.S. population is roughly 330 million people

first important definition is the working age population

it includes civilians above the age of 15

that are not institutionalized the military is excluded from

unemployment and labor force calculations

that group is then split into the labor force and

not in the labor force not in the labor force is defined as

students homemakers retirees discouraged workers

the labor force is then split into two different groups

those that are employed and those that are unemployed

using this information we can then calculate the unemployment rate

using this information we can then calculate the unemployment rate

by dividing the unemployed by the labor force

and multiplying it by a 100 this is how the u3 calculation of unemployment

rate is done a 30-year graph of the u3 unemployment

rate looks like this

as I mentioned the u3 unemployment rate is the most popular

measure of unemployment it and it is the one that is usually referenced in the news

after two months of unprecedented increases U.S. unemployment rate took a

surprising turn in May it went down this dip was a hopeful sign

that the economy might be bouncing back from Coronavirus lockdowns

but that dip wasn't universal black unemployment ticked upwards

it declined in June but not at the same rate as unemployment overall

this follows a decade where the unemployment gap between white and black

workers has been narrowing but the recent unemployment figures

reveal the financial fragility there are other unemployment rates that

we also keep track of the BLS reports u1 through u6 every

month each measure helps us learn more about

the different segments of the labor market

another measure that the BLS provides is the labor force participation rate

it measures the labor force as a fraction of

working age population and it is measured by dividing the labor force

by the working age population and then multiplying it by a 100

the past 30 years of data shows us that the labor force

participation rate hovers around 63% during recessions the labor

force participation rate falls as more people exit the labor market and shift

towards education or other activities that are not in the

labor market the labor force participation rate is

also sensitive to the population pyramid in countries where the population is

aging the labor force participation rate will be lower as people retire

they exit the labor force

now you know more about unemployment more importantly

you know about my favorite day of the month Jobs Friday