Per the Bureau of Labor Statistics, in June 2010 employment declined by 125,000 workers while at the same time the unemployment rate declined to 9.5%. The unemployment rate formula is as follows: ((the number of people unemployed)/(labor force) x 100). Logically, if the number of people working decreases and the unemployment percentage rate also decreases, there has likely been a shift in the labor force as well. May is often graduation month for many high schools and colleges, so it is possible that there was a large number of students that entered the workforce from May to June. Students fall into the “not in the labor force” category and their influx into the labor market could be large enough to affect the unemployment rate.
What other shifts in the labor market could affect the unemployment percentage in this way?
