What Is an Employment Rate?

An employment rate is an assessment of the percentage of individuals residing within a defined geographic region that are currently employed. Typically, the rate is based on the total number of people within that defined area who are considered employable based on factors such as age. Different types of employment rates may be calculated for use in different types of economic assessments, with some calculations focusing on overall employment while others focus on only those considered to be employed full time.

Many people are familiar with the unemployment rate, which identifies the percentage of eligible citizens who are not currently employed or hold jobs that do not meet the standards for the calculation of the figure. An employment rate shows the other side of the economic picture, with the focus being on the percentage of qualified residents that are considered to be active in the work force. In most countries, the goal is to keep the percentage for unemployment as low as possible while also promoting opportunities that yields a high employment rate.

There are differences in how the employment rate is calculated. For example, it is not unusual for people who work only enough hours per week for a minimum number of consecutive weeks to be considered part-time employees and not relevant to determining the full-time employment rate. Other calculations may include a combination of full-time and part-time employment, using some formula that helps to balance the average between the total number of hours worked within a geographical area and within a specified time frame.

Understanding the current employment rate and how it relates to the current unemployment rate for the same period and location is crucial to developing an accurate view of the economy within that area. Taking into account the differences in the employment to population ratio, it is possible to determine if new job opportunities in the area are offsetting losses of plant closings and other losses, and if the rate is high enough to indicate a health economy within that location. Many jurisdictions will determine the unemployment rate for a defined geographical area on a regular basis, sometimes as frequently as each month.

Standards vary in different countries when creating the basis for calculating the current employment rate. In some nations, anyone who is between the ages of 15 and 65 are considered employable. Other nations may choose to set the age standard at a minimum of 18 and a maximum of 70. Knowing the exact criteria used within a given nation to assess the employment rate is necessary to interpreting the data with greater accuracy, especially when comparing rates between two or more countries.