Question

CategoryNumber (in millions)

Unemployed 5.00

Unemployed more than 27 weeks 1.00

Fictionally unemployed 2.00

Cyclically unemployed 1.25

Discouraged workers 1.00

Workers who are part time but want full time work 3.00

Marginally attached workers 5.00

Employed 120

Population aged 16 and above 250

Total population 300

_________

What is the U-3 unemployment rate (i.e., the "headline" rate, which is what you see most often)?

_________

What is the U-6 unemployment rate? That is, the "broad" measure of unemployment, or sometimes called the "underemployment rate."

_________

What is the labor force participation rate?

Answer 1

Question 1

Calculate the U-3 unemployment rate -

Unemployed = 5 million

Employed = 120 million

Labor force = Unemployed + Employed = 5 million + 120 million = 125 million

U-3 unemployment rate = [Unemployed/Labor force] * 100 = [5 million/125 million] * 100 = 4%

The U-3 unemployment rate is 4%.

Question 2

Calculate the U-6 unemployment rate -

Unemployed = 5 million

Employed = 120 million

Labor force = 125 million

Part-time workers = 3 million

Marginally attached workers = 5 million

U-6 unemployment rate = [(Unemployed+Marginally attached workers+Part-time workers)/(Labor force+Marginally attached workers)] * 100

U-6 unemployment rate = [(5 million + 5 million + 3 million)/(125 million + 5 million)] * 100

U-6 unemployment rate = [13 million/130 million] * 100

U-6 unemployment rate = 10%

The U-6 unemployment rate is 10%.

Question 3

Calculate the labor force participation rate -

Labor force = 125 million

Population aged 16 and above = 250 million

Labor force participation rate = [Labor force/Population aged 16 and above] * 100

Labor force participation rate = [125 million/250 million] * 100 = 50%

The labor force participation rate is 50%.