What Is the Current US Unemployment Rate?

The unemployment rate is unchanged from November

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The current U.S. unemployment rate is 6.7% for December 2020, the Bureau of Labor Statistics (BLS) said in its monthly report on Friday. The rate is close to double the 3.5% rate in February, before the COVID-19 pandemic. This unemployment rate is unchanged from November.

Unemployment is one of the most critical economic issues facing the country as it balances re-opening with safety months into the pandemic. In April, after governments shut down the economy, the unemployment rate reached 14.7%, the highest since the Great Depression. Since then, it gradually improved as businesses have attempted to reopen safely, but the increase in COVID-19 cases in November and December has led to renewed measures to control the virus, including closing businesses.

Economists warn that the economy needs a widely distributed vaccine before unemployment returns to normal levels. Two vaccines have been approved for emergency use authorization from the Food and Drug Administration (FDA), but distribution has been slow.

"The economy is finding new ways to do business, and is hiring back workers on furlough because of COVID-19 more quickly than expected," said Robert Frick, corporate economist at Navy Federal Credit Union, in an email interview. "On the other hand, the pace of new hires is slowing, and more workers are moving into the ranks of the long-term unemployed."

The Federal Reserve estimated that the economy will return to a healthier 5.0% unemployment rate in 2021.

The sectors with the biggest gains included professional and business services, retail trade, and construction.

Overall, the number of unemployed is at 10.7 million, which is 4.9 million higher than in February. The ongoing job losses show the tremendous impact of the COVID-19 pandemic on the employment situation.

December Unemployment Figures in Detail

The total number of unemployed is 10.7 million, which is the same as November. The number of long-term unemployed (those who have been searching for jobs for 27 weeks or more) rose to 4.0 million. A smaller number, 2.9 million, were laid off in the last 5 weeks. This shows that the largest segment of the unemployed lost their jobs in March during the national shutdown.

The real unemployment rate dipped from 12.0% to 11.7% in December. This alternate measure of unemployment, known as U-6, gives a broader definition of unemployment. It includes people who would like a job but haven't looked for one in the past month. It also includes those who are underemployed and marginally attached.

The real unemployment rate contains 663,000 discouraged workers, up from 657,000 in November. Discouraged workers are people who have given up looking for work but would take a job if offered. They are not counted in the unemployment rate because they haven't looked for a job in the past four weeks.

The labor force participation rate was 61.5%, which is also unchanged from November. The labor force doesn't include those who haven't looked for a job in the past month. Some would like a job, but others dropped out of the labor force for different reasons. They may have retired, gone back to school, or had a baby.

Difference Between the Unemployment and Jobs Reports

The unemployment rate and figures from the jobs report don't always tell the same story because they are taken from two different surveys.

The unemployment rate is taken from the household survey of individuals. It describes who is employed and who isn't based on their responses.

The number of jobs added is taken from the establishment report, more commonly called the nonfarm payroll report. This survey of businesses describes how many jobs were created or lost by industry.

Since these reports are taken from completely different sources, the number of unemployed doesn't match up to the number of jobs lost. Those discrepancies are expected. These estimates are revised each month as more data comes in.

How to Use the Unemployment Rate

Keep in mind that the unemployment rate is a lagging indicator. It tells you what has already happened. Employers only lay off workers after business has already slowed.

The unemployment rate hasn't lagged as much as usual during the pandemic because it all happened so suddenly.

When a recession is over, companies resist hiring new workers until they are sure the economy will stay strong. The economy could improve for months, and the recession could be over before the unemployment rate drops. Although it's not suitable for predicting trends, it's useful for confirming them.

Recent Unemployment History 

To put the December report into perspective, check the unemployment rates since 1929.

In 1933, the unemployment rate reached a record of 24.8%. Unemployment remained above 14% for nine years, between 1931 and 1940. April's unemployment rate reached that level in just a month.

In November 1982, unemployment rose to 10.8%. During the 2008 recession, unemployment peaked at 10% in October 2009. These were devastating recessions. High unemployment levels lasted for years. That's not expected to happen with the 2020 recession.

Key Takeaways

  • The unemployment rate is 6.7%, which is unchanged from November.
  • This is significantly higher than before the pandemic.
  • Some of the biggest gains came in professional and business services, retail trade, and construction.

Article Sources

  1. Bureau of Labor Statistics. "Employment Situation Summary." Accessed Jan. 8, 2021.

  2. Bureau of Labor Statistics. "Employment Situation Summary Table A." Accessed Jan. 8, 2021.

  3. Bureau of Labor Statistics. "Top Picks," Select "Unemployment Rate," Click "Retrieve Data." Accessed Jan. 8, 2021.

  4. Creighton University. "Goss: Economy's Future Depends on COVID-19 Vaccine." Accessed Jan. 8, 2021.

  5. Bloomberg. "More Than 17.5 Million Shots Given: COVID-19 Vaccine Tracker." Accessed Jan. 8, 2021.

  6. FDA. "FDA Takes Additional Action in Fight Against COVID-19 By Issuing Emergency Use Authorization for Second COVID-19 Vaccine." Accessed Jan. 8, 2021.

  7. Board of Governors of the Federal Reserve System. “Table 1. Economic Projections of Federal Reserve Board Members and Federal Reserve Bank Presidents, Under Their Individual Assumptions of Projected Appropriate Monetary Policy, December 2020.” Accessed Jan. 8, 2021.

  8. Bureau of Labor Statistics. "Table A-15. Alternative Measures of Labor Underutilization." Accessed Jan. 8, 2021.

  9. U.S. Bureau of Labor Statistics. "Labor Force, Employment, and Unemployment, 1929-39: Estimating Methods," Page 51, Table 1. Accessed Jan. 8, 2021.