How to Calculate the Unemployment Rate
The unemployment rate is the number of unemployed divided by the labor force, times 100.
Formula
Unemployment rate = (Unemployed ÷ Labor force) × 100 | Labor force = Employed + Unemployed
Steps
- 1Identify the labor force. Add the employed and the unemployed (people without a job who are actively looking). Exclude those not looking, students, retirees, and military.
- 2Divide unemployed by the labor force. Use only people in the labor force in the denominator.
- 3Convert to a percent. Multiply by 100.
Worked example
If 8 million are unemployed and the labor force is 160 million, the unemployment rate = (8 ÷ 160) × 100 = 5%.
Frequently asked questions
Are discouraged workers counted as unemployed?
No. Discouraged workers have given up looking, so they are not in the labor force and not counted as unemployed — which can understate the true unemployment rate.
How do you calculate the labor force participation rate?
Labor force participation rate = (Labor force ÷ working-age population) × 100.