Which of the Following Is Included in the Unemployment Rate?
Understand who is counted in the unemployment rate, including job seekers and furloughed workers, and who is excluded from official statistics.
The unemployment rate is a key economic indicator measuring the percentage of jobless individuals actively seeking work. It influences government policies, business decisions, and public perception of economic conditions. However, not all unemployed individuals are counted, as specific criteria determine inclusion.
Individuals Actively Searching
To be counted in the unemployment rate, a person must be jobless and actively looking for work. This includes submitting applications, attending interviews, or engaging in other job-seeking activities within the past four weeks, as defined by the Bureau of Labor Statistics (BLS).
People who want a job but have not applied anywhere in the past month do not qualify. Simply browsing job listings without taking action is insufficient, whereas submitting resumes, contacting employers, or registering with employment agencies meets the criteria. This distinction ensures the unemployment rate reflects those making a serious effort to find work.
Temporary Layoffs or Furloughed Workers
Workers on temporary layoff or furlough are counted as unemployed, even if they are not actively seeking new jobs, since they expect to return to their previous positions.
A temporary layoff occurs when an employer lets workers go with the possibility of rehiring them later. These employees may receive severance pay or unemployment benefits, depending on state regulations and company policies. Furloughed workers, though still employed, do not receive wages for a set period but often retain benefits like health insurance.
Government agencies track these groups separately from job seekers due to their higher likelihood of reemployment. During the COVID-19 pandemic, for example, millions were furloughed and later recalled as businesses reopened, highlighting the impact of these classifications on labor statistics.
Excluded Groups
The official unemployment rate does not include everyone without a job. Many individuals remain outside this measure because they do not meet specific criteria.
One excluded group is discouraged workers—people who have stopped looking for jobs due to repeated failures or a belief that no opportunities exist. Since they are not actively searching, they are classified as “marginally attached to the labor force” rather than unemployed.
Informal or gig workers may also be overlooked if they do not report their employment status accurately. Independent contractors, freelancers, or workers paid under the table might not be captured in traditional surveys, leading to an underestimation of labor underutilization. Similarly, part-time workers who want full-time positions—known as the underemployed—do not count toward the unemployment rate despite their financial struggles.
Students and retirees are also excluded unless they are actively seeking work. Full-time students, even those who want jobs, are not considered unemployed unless they are part of the labor force. Retirees, whether by choice or due to job market conditions, are similarly left out unless they attempt to re-enter employment.