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LMI Myth Busting Series

LMI Myth Busting: The Unemployment Rate Represents All of the Population Who Does Not Have a Job

For people to be included in the unemployment rate they have to be part of the labor force. Labor force is defined as the sum of all persons 16 years of age and older in the civilian non-institutional population who are either employed or unemployed.

So, the myth stated above is wrong on several counts.

1. Not all of the population is included when estimating the labor force. Only those 16 and older are considered. Only those not in institutions are included. (For instance, those in prison are not included.)
2. To be included in labor force estimate, individuals have to either have a job or be actively looking for work. In other words, those who choose not to work (such as retirees or full-time care givers of their children or parents) are not included.

Looking at more technical definitions used in labor force data, people are classified as employed if they did any work for pay or profit during the survey reference week, at least 15 hours of unpaid work in a family-operated enterprise or were temporarily absent from their regular jobs because of illness, vacation, bad weather, industrial dispute or various personal reasons.

The unemployed are people who did not work during the reference week but were actively looking and available to work during that week, as well as those who made specific efforts to find work within the preceding four-week period. Also included are those who are waiting to be called back by an employer due to a temporary layoff.

Once someone who is classified as unemployed stops looking for work, the individual is no longer considered “unemployed” and falls out of the labor force. The person does not have a job but is not included in the unemployment rate because he or she is not considered to be in the labor force.

Labor force statistics for South Dakota are produced by the South Dakota Department of Labor and Regulation’s Labor Market Information Center in cooperation with the Bureau of Labor Statistics. To find the most current unemployment rate and labor force data for South Dakota or any of its areas, visit our website at https://dlr.sd.gov/lmic/menu_labor_force.aspx. Or contact us at 605.626.2314; we’re here to help. More information on labor force data can be found at http://dlr.sd.gov/lmic/labor_force_technical_notes.aspx.