How We Measure Unemployment and Why It Matters

“How many people are unemployed” sounds like a simple question with a straightforward answer: just go around and find out how many people don’t have jobs and you’re done!

However, as economists who study the issue will tell you, it’s not that easy. The Bureau of Labor Statistics, a government agency charged with collecting data, has six separate measures of unemployment. And just in case you think we’re splitting hairs, those different measures ranged from as low as 1.7 to as high as 8.5 percent last year.

Since the way unemployment is measured and talked about can influence stock prices, elections, and how people generally feel about the economy on a day to day basis, it’s important to understand what these different numbers mean.

Luckily, we’re joined by some folks who spend their time thinking about this stuff so you don’t have to:

  • Eric Morath, labor economics and policy reporter for the Wall Street Journal
  • Michael Farren, economist with the Mercatus Center who specializes in labor, economic development, and transportation issues
  • Kate De Lanoy, director of Media Relations at Mercatus

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Photo credit: Lynne Sladky/AP/Shutterstock