Unemployment Rate.

In plain English

The unemployment rate measures how many job seekers are coming up empty. The government counts you as unemployed only if you are without a job, available to work, and have actively looked in the past four weeks. It then divides that number by the labor force, which is everyone working plus everyone actively looking. A key catch: people who give up looking entirely drop out of the labor force and stop counting as unemployed, which is one reason the rate can fall even when the job market feels weak.

01Why it matters

A rising unemployment rate often means layoffs are spreading and your own job feels less secure, while a low rate can give you more leverage to ask for a raise or switch employers.

02The math, step by step

Suppose a town has 1,000 people in its labor force: 950 are working and 50 are actively job hunting. The unemployment rate is 50 divided by 1,000, which is 5 percent. If 20 of those job hunters get discouraged and stop looking, they leave the labor force, the count of unemployed drops to 30, and the rate falls to about 3.1 percent even though no new jobs appeared. For the current national figure, see bls.gov.

03What this is NOT

04Receipts

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