Uploaded September 2026 | Updated September 2026, 1 week ago
How the unemployment rate is calculated using official definitions, labor force data, and FRED graphs, and why unemployment never falls to 0%.
How is unemployment defined in the United States?
If someone has a job, they’re defined as “employed.” But does that mean that everyone without a job is unemployed? Not exactly.
A child without a job isn’t unemployed. Someone who is in prison also isn’t counted. A retiree, too, does not count toward the unemployment rate.
For the official statistics, you have to meet quite a few criteria to be considered unemployed in the U.S. For instance, if you’re without a job, but have actively looked for work in the past four weeks, you are considered unemployed.
In times of recession, when people are faced with long-term unemployment and lots of discouragement, the official rate might not count some of the people that you would otherwise consider unemployed.
This video will give you a clear picture of how the unemployment rate is defined and build a foundation for further understanding this important facet of labor markets.
TEACHERS: This video is part of our FREE, 3-day Labor Force and Unemployment unit plan. Register for free access to more than 60 days of lesson plans! pages.mru.org/lesson-plans/labor-force-unemployment-unit
Learners: View all the videos in our Principles of Macroeconomics course: youtube.com/playlist?list=PL-uRhZ_p-BM52EbMG1NR1ZfG9tEvcxE4u
or complete the full course for free on MRU.org with integrated interactives and practice questions: learn.mru.org/courses/principles-of-microeconomics
How the unemployment rate is calculated using official definitions, labor force data, and FRED graphs, and why unemployment never falls to 0%.
How is unemployment defined in the United States?
If someone has a job, they’re defined as “employed.” But does that mean that everyone without a job is unemployed? Not exactly.
A child without a job isn’t unemployed. Someone who is in prison also isn’t counted. A retiree, too, does not count toward the unemployment rate.
For the official statistics, you have to meet quite a few criteria to be considered unemployed in the U.S. For instance, if you’re without a job, but have actively looked for work in the past four weeks, you are considered unemployed.
In times of recession, when people are faced with long-term unemployment and lots of discouragement, the official rate might not count some of the people that you would otherwise consider unemployed.
This video will give you a clear picture of how the unemployment rate is defined and build a foundation for further understanding this important facet of labor markets.
TEACHERS: This video is part of our FREE, 3-day Labor Force and Unemployment unit plan. Register for free access to more than 60 days of lesson plans! pages.mru.org/lesson-plans/labor-force-unemployment-unit
Learners: View all the videos in our Principles of Macroeconomics course: youtube.com/playlist?list=PL-uRhZ_p-BM52EbMG1NR1ZfG9tEvcxE4u
or complete the full course for free on MRU.org with integrated interactives and practice questions: learn.mru.org/courses/principles-of-microeconomics
