Measuring Unemployment

Suppose that the U.S. noninstitutional adult population is 230 million and the labor force participation rate is 67 percent.

a. What would be the size of the U.S. labor force?

b. If 85 million adults are not working, what is the unemployment rate? 


In the present scenario, the total number of adults who are not institutionalized in USA is 230 million. The 230 million adults constitute the country’s pool of potential workers. The country’s labor force (LF) size is product of the participation rate of the labor force and the total number of adults who are not institutionalized.

(participation rate of the LF) * (total number of adults not institutionalized) = (LF size)
(67/100) * 230,000, 000 = 154,100,000 persons
LF size = 154,100,000 persons

There are 154,100,000 adults in the country’s LF. The adults have jobs or are still seeking for jobs. The number of adults not in the country’s LF is:

230,000, 000 – 154,100,000 = 75,900,000 adults

The 75,900,000 adults neither have jobs nor are they seeking for jobs. There is a high chance that they are parents out of employment to look after their children and retirees. Notably, in the present scenario, 85 million adults do not have jobs. As seen from the above computation, 75,900,000 of them neither have jobs nor are they seeking for jobs. The difference between the two figures is the number of potential workers who are presently unemployed.

85,000,000- 75,900,000 = Number of unemployed adults
9,100,000 = Number of unemployed adults

To determine the country’s unemployment rate, one should proceed as shown in the following table.

(unemployment rate) = (Number of unemployed adults)/ (LF size) * 100
9,100,000/154,100,000 * 100 = 5.905%
(unemployment rate) = 5.9%

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