How is the Unemployment Rate calculated?

The unemployment rate is estimated using a survey of households called the Current Population Survey. In this survey, people are asked if they have a job, and if not, whether they are actively looking for work. Those who have a job are classified as employed, while those do not have a job but are actively looking for work as classified as unemployed. Those who do not have a job and are not actively looking for work as said to be “out of the labor force.”
The labor force is comprised of those either employed or actively looking for work, and the unemployment rate is the fraction of the labor force that is not currently employed. The labor force participation rate of the fraction of the entire population that is a part of the labor force.

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