Historical U.S. Unemployment Rate by Year

The U.S. unemployment rate—the percentage of the labor force without a job, but able to work and actively searching for it—is one of the key indicators of the overall health of the nation’s economy. Since the Great Depression, the unemployment rate has shifted in response to policy changes, historical events at home and worldwide, and economic developments.

What Is the Unemployment Rate?

The unemployment rate is the percentage of the labor force without a job. Specifically, it is a measurement of the percentage of people of working age who aren’t working, but are otherwise available and looking for work.

It reflects the business cycle and tends to rise during recessions and fall during economic expansions. As economic growth occurs, more production happens in general, and more workers across industries are needed to produce additional goods and services. The opposite tends to be true during difficult economic periods.

A division of the U.S. Department of Labor known as the Bureau of Labor Statistics (BLS) calculates the unemployment rate by conducting a monthly survey of 60,000 households selected by random sampling to closely approximate the full population of the country. The sampling divides counties and cities in the United States into 2,000 units, then the Census Bureau selects a group of roughly 800 of these geographic areas for surveying.

Surveyors call selected households and ask questions about their work or work-seeking behaviors over a particular reference week. The BLS then extrapolates nationwide data from these results and reports the total number of employed and unemployed people for the previous month, as well as characteristics about them, and the unemployment rate is expressed as a percentage.

What Affects the Unemployment Rate?

The BLS has measured unemployment since the stock market crash of 1929. Since that time, global events including World War II, the Korean War, and the Cuban Missile Crisis all exerted an influence on unemployment. During periods of war, a surge in military spending often leads to increases in output and employment, and the unemployment rate drops. More recently, the COVID-19 pandemic caused a sharp spike in unemployment.

Another factor affecting unemployment is macroeconomic activity and fiscal policy. Policymakers can employ both demand- and supply-side policy in an effort to reduce the cyclical nature of unemployment. Periods of recession (or depression) and expansion exert some of the largest forces on employment rates.

Note that the participation rate is a similar metric to the unemployment rate, although the two provide different information. The participation rate is a measurement of the percentage of all Americans in the labor force.

Below are historic unemployment rates for the month of December in years dating back to 1929. While there are myriad factors influencing unemployment rates, we’ve included an example of a particularly important variable or event in most years.

Source: U.S. Bureau of Labor Statistics

Unemployment Rate, Recessions, and Expansions

Unemployment is countercyclical relative to economic activity. This means that in periods of economic slowdown, such as a recession or a depression, unemployment increases. On the other hand, during periods of high economic activity or expansion, unemployment decreases.

When the economy is faltering, demand for and production of goods and services drop. Businesses may either no longer need to employ the same number of workers to meet production needs, or they may not be able to afford to maintain employee levels, or a combination of both. As a result, they may reduce their workforce. However, businesses may cut back hours, reduce pay, or take other measures before laying off workers, resulting in a lag between an economic downturn and increasing unemployment.

When economic activity picks up, there is also often a period of time before this will be reflected in decreasing unemployment rates. Businesses may attempt to achieve higher production rates with the same number of employees to keep costs down before resorting to hiring additional employees.

The Bottom Line

The U.S. unemployment rate has been tabulated monthly since 1929 by the U.S. Bureau of Labor Statistics (BLS). It is a measurement of the percentage of an eligible workforce that isn’t currently working, but is actively searching for work.

The unemployment rate is a key measure of the overall well-being of an economy. Unemployment responds to changes in governmental policy, periods of economic growth or contraction, and global events such as wars or pandemics.