The employment rate is one of several simple calculations that can help you understand the health of a certain place, like the unemployment rate and the labor force participation rate. Here’s how those rates are different from the employment rate:
Unemployment rate: The unemployment rate counts those who are temporarily not working and those looking for work. Some unemployment calculations also include those who are working part time but are looking for full-time work, who are considered “underemployed.”
Labor force participation rate: The labor force participation rate counts those who are employed and actively looking for a job and compares that number to the total population. It measures those who intend to work rather than those who are currently working.
Employment-to-population ratio: This ratio compares the number of people who are employed to the total population. The employment rate compares the number of people who are employed to the available labor force, so it will be a higher number than the employment-to-population ratio.
How to use the employment rate formula
You might calculate the employment rate for professional reasons if you’re researching relative economic health or making long-term plans. Here are the steps to calculating the employment rate:
1. Determine potential labor pool
Find out the total labor force for the area and time you’re interested in calculating. This information is usually publicly available through federal agencies on government websites and contains information from the most recent census or population survey. You may also find this information available in detail from local government sources.
Example: A reporter wants to know how the employment rate has changed from the past year to the current year in Milltown. They look for labor force information from the U.S. Bureau of Labor Statistics and find that last year, the total labor force was 35,000 and this year the total labor force is 42,000.
