The unemployment rate measures the portion of the population that currently does not have a job and is actively seeking work. Contrary to popular belief, the unemployment rate is not calculated using only unemployment insurance (UI) claims. There are several reasons for this, but most importantly, because UI claims only count those who filed for claims and those who are eligible, leaving out those who are unemployed but do not bother to file for UI or who are still unemployed after their UI runs out.
Rather, the government uses information collected in the Current Population Survey (CPS). The CPS is a monthly sample survey conducted by the U.S. Census Bureau consisting of in-home and phone interviews of roughly 60,000 households across the country. The CPS has been conducted by the U.S. government every month since 1940.
The CPS's sole purpose is to glean employment information that is used to determine the share of the population that falls into one of three categories: employed, unemployed, and not in the labor force. Those who have a job are employed. Those who do not have a job and are available and actively looking for work are considered to be unemployed. Those who do not fall into either of those two categories are not in the labor force (an example would be a retired individual or a homemaker, i.e. people not looking for work). Active duty military and institutionalized individuals are not included in these categories.
To come up with an accurate estimation, the U.S. Department of Labor, Bureau of Labor Statistics uses a combination of current and historical CPS data, Current Employment Statistics (CES) program data, and state UI statistics to come up with the unemployment rate. This is known as the U-3 rate. There are a few more versions, including the U-6 rate which counts discouraged, underemployed, and unemployed workers. Economists have generally regarded a 4-5% unemployment rate as one that reflects a fully employed workforce characterized by moderate wage growth that is matching gains in labor productivity. In light of the recent recession, some economists think that this "natural" rate of employment now lies in the 5-6% range.
This indicator measures the share of the population who are employed, as well as the unemployment rate in Walla Walla County. Washington State and the U.S. are offered as benchmarks.