UNEMPLOYMENT

Reports on the economy often include information on unemployment to illustrate whether or not a nation's economy is doing well. Who is considered unemployed and what does the unemployment rate really represent?

The unemployed are individuals who do not currently have a job but are actively searching for one. These individuals, combined with those who are currently employed, make up the nation's labor force. A person who is not working and is not looking for a job is not considered unemployed.

The unemployment rate is usually described as a percentage. It is the percentage difference between the number of individuals in the labor force who are employed and those who are actively seeking work. In 1993 there were 129.5 million people in the U.S. labor force. Of that number, 8.7 million were unemployed, creating an unemployment rate of 6.7 percent for all workers.

There are two possible percentages for unemployment, the rate for all workers and the rate for civilian workers. All workers in the labor force include civilian workers and those in the U.S. armed forces. The civilian rate is considered to provide the clearest picture of the economy's strength because civilian workers are employed according to market forces. This is also the rate most often used by the media and in economic reports. The U.S. unemployment rate for civilian workers during 1993 was 6.8 percent.

Can a nation achieve full employment? Actually, a 6 percent unemployment rate is currently considered to be full employment. How can this be? The constant flux of the labor force, whether from seasonal variations or from a natural fluctuation of workers leaving one job and searching for another (for career advancement, skill demands, or some other motivation), makes it unrealistic to expect an unemployment rate of zero will ever be achieved. The full employment rate has risen steadily over the years. From 1952 to 1958, full employment was considered to be a rate of 4 percent unemployment. The rate rose to 4.5 percent in 1970, increased to 4.9 percent in 1977, and held at 6 percent through 1998.

If the full employment rate is 6 percent unemployment and the 1993 unemployment rate for civilian workers was 6.8 percent, then the economy for that year was providing the jobs to meet the needs of employment seekers.