The Difference Between “Unemployment Rate” and “Jobless Rate”

One web-site I like to check regularly is a site that references recent economic articles — Economist’s View. Today, I found this interesting article with an interesting theory on why the unemployment rate remains low and explaining the difference between the unemployment rate and the jobless rate.

About unemployment rate, the article says, “Historically, the rate is actually somewhat low. At 5.0 percent, it is lower than the average for most years since the 1970s. Still, there is some concern that the low rate does not necessarily imply a strong labor market because of how the unemployment measure is calculated. For instance, the unemployment rate measures only a subset of employable people—those in a country’s workforce who are over the age of 16, do not currently have a job, and have been actively seeking work in the past month. It does not account for discouraged workers, workers who want a job but are not currently looking due to adverse job market conditions, or part-timers who would like full-time work if it were available.”

About the jobless rate, the article says, “One alternative measure of employment conditions is the jobless rate, defined as the percentage of the population without a job. Unlike the unemployment rate, its denominator is the entire working-age population, not just the labor force, so it does not have the problem of a denominator that fluctuates over the business cycle. Recently some observers have noted that the jobless rate for prime-age men is historically high.”