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Calculation of the Unemployment Rate

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a) Calculate the unemployment rate when labor force is 154 million and number of unemployed is 14.6 million.

b) Due to the slow-down economy, it is expected that there will be 0.7 million additional workers who will lose their jobs next month. What is the expected unemployment rate for next month?

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This solution shows how to calculate the unemployment rate.

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Investopedia (2011) defined Unemployment Rate as "the percentage of the total labor force that is unemployed but actively seeking employment and willing to work". Parallel to that, Business Dictionary (2011) defined it as "percentage of total workforce who are unemployed and are looking for a paid job".

Based on these definitions, we can formulate unemployment rate as:

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