The unemployment rate measures the percentage of people who are jobless and seeking employment as a percentage of the labor force (the total number of employed and unemployed workers). It is based on household labor surveys. Detailed information is collected on the industry and occupation of the jobless, how long they have been without work, their methods for finding new jobs, and other factors. The official unemployment figures also include a component called structural unemployment, which arises from the mismatch of jobs available and the skills of local workers. For example, technological advances may make certain industries obsolete and require layoffs. When this occurs, skilled employees must search for jobs in other industries. The resulting structural unemployment can be high.
Regardless of its causes, unemployment is a serious problem for individuals, families, and communities. It reduces consumer spending, which is a major driver of economic growth. High rates of unemployment also lower government tax revenues and create a drain on social welfare programs. At the community level, high unemployment can lead to social unrest, a sense of hopelessness, and diminished family bonds.
Economists and academics have debated the causes and cures of unemployment for decades. However, there is one thing that everyone agrees upon: a country’s unemployment rate should be monitored closely. It provides an important snapshot of the economy’s health, and it offers insight into the effectiveness of policies aimed at reducing joblessness.