Unemployment
Plain definition
Unemployment is the state of being without a job while actively seeking work. The unemployment rate equals (number of unemployed / labor force) x 100, where the labor force is everyone employed plus everyone unemployed and looking.
In economics
Unemployment is one of the two headline goals of macroeconomic policy (alongside stable prices). It is a lagging indicator — it peaks after recessions officially end — and it carries large social costs: lost output, skill erosion, and hardship. Economists split it into frictional, structural, and cyclical types, since each demands different policy responses.
Example
If a country has 150 million employed and 10 million unemployed and seeking work, its labor force is 160 million and the unemployment rate is (10 / 160) x 100 = 6.25%. The 20 million adults neither working nor looking (retirees, students, discouraged workers) are excluded from both numbers.
The unemployment rate is widely confused with the share of all adults without jobs. It counts only the labor force — people working or actively looking — so discouraged workers who gave up searching disappear from the rate even though they are jobless. That is why analysts also watch the labor-force participation rate and broader measures like U-6.