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What Unemployment Rates Really Tell Us

Knowing how to interpret unemployment rates can help you better understand the economy.

If you hear only one piece of economic data this month, it will likely be the unemployment rate. How many jobs the U.S. economy adds versus how many jobs it loses drives much of our media’s economic reporting. But what does the unemployment rate actually tell us? And are there better ways to analyze employment and the economy? Let’s take a deeper look.

The Unemployment Rate Offers a Snapshot of the Economy


The reason the unemployment rate is such a popular data point is that it’s a useful snapshot of the economy. If the unemployment rate is falling month-to-month, then we can be fairly certain that the economy is improving. Likewise, if the unemployment rate rises for a number of consecutive months, there is good reason to be worried about the performance of the economy. In many ways, the trend line is more important than the specific unemployment rate for any given month. And that’s because …

The Unemployment Rate Does Not Include All Citizens

The unemployment rate only measures the unemployment among those who are actively seeking a job. Students, retirees, and stay-at-home parents are not counted as part of the workforce. Neither are those who do not meet the criteria for “actively seeking work.” The Bureau of Labor Statistics defines you as unemployed if you don’t have a job and if, in the last 4 weeks, you have:*

  • Contacted
    • an employer directly or had a job interview
    • a public or private employment agency
    • friends or relatives who could provide employment
    • a school or university employment center
  • Submitted résumés or filled out applications
  • Placed or answered job advertisements
  • Checked union or professional registers
  • Conducted some other means of active job search

If you have done none of the above during the last 4 weeks and don’t have a job, you are considered neither employed nor unemployed. That means, the official unemployment rate does not count those who’ve given up looking for a job, those who are freelancers/private contractors and are in-between clients, or those who, like stay-at-home-parents, might choose to be employed if better opportunities present themselves.

Needless to say, the unemployment rate does not offer a complete picture of what’s going on in the economy. But’s that’s okay, because …

The Unemployment Rate Is Only One Part of a Broader Series of Reports

The media fixates on the unemployment rate because it’s a simple number that they can communicate quickly. However, economists and policymakers use much more than the unemployment rate in measuring economic performance. When analyzing the nation’s economy, you should also look at:

  • Gross domestic product (GDP) growth or decline
  • Gross output
  • The rate of inflation
  • Trade deficit increases or decreases 
  • National debt increases or decreases
  • Labor productivity
  • Income inequality
  • Cost of living fluctuations  

Data for these and other measurements come from government organizations like the Bureau of Labor Statistics and the Bureau of Economic Analysis, as well as from major research and polling groups. No one statistic can tell the whole story but, taken together, the available data can give you a good sense of how the economy is performing and how it might continue to perform in the future. Of course, knowing how to read and interpret all this data will require some special training. That’s why earning an MPA degree can help you better understand the conditions that lead to high unemployment and to formulate public policies and programs to better serve the unemployed and under employed.

If you’re interested in matters of public policy and unemployment and want a career that can help you improve the economy and job opportunities for individuals from all classes of society, you should consider earning a Master of Public Administration. An MPA degree can help you learn how to effectively use economic data to inform public policy in a public administration career. Specifically, you can gain the skills that can prepare you for a career as a city manager, government relations office, budget manager, or similar position. And whether your preference is working in a government agency, nonprofit, public affairs or health organization, an MPA degree can be an excellent credential to have.

You don’t even have to upend your life to earn your MPA. Through an online MPA program, you can earn your MPA degree in a flexible format that can allow you to continue working full time as you earn your degree. An online MPA program is a great choice for anyone looking to start a career—or get ahead—in public administration. And it’s a particularly good choice for those who want to serve people in their communities and nation by implementing programs and policies that improve economic conditions and lower the unemployment rate.

Walden University is an accredited institution offering an online Master of Public Administration degree program. Expand your career options and earn your degree in a convenient, flexible format that fits your busy life.

*Bureau of Labor Statistics, U.S. Department of Labor, How the Government Measures Unemployment, on the internet at

Walden University is accredited by The Higher Learning Commission,