Understanding Unemployment: a classroom activity to calculate the unemployment rate and other labor force metrics

Lucy Malakar

Based on an activity described by Mary Suiter in Feducation: Episode 3 – Monetary Policy & Unemployment

This material is replicated on a number of sites as part of the SERC Pedagogic Service Project


This simple activity gets students out of their seats and talking to each other while illustrating how the national unemployment rate and the civilian labor force participation rate are calculated. Through small group interaction and class discussion, students gain a better understanding of who is and who is not considered to be in the labor force and who is counted as being unemployed. Initially, students break into three groups and assume the role of various economic citizens: from the fully employed to the imprisoned. Once the entire class is reconvened, the metrics are calculated and topics such as discouraged workers, underemployment and reasons why the official unemployment rate may be underestimated are discussed.

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Learning Goals

1. Students will apply labor force concepts to calculate the civilian labor force, the labor force participation rate, the official unemployment rate, and an alternate unemployment rate.
2. Students will learn about the effects of discouraged workers, the incarcerated, and the underemployed on the unemployment rate.
3. Students will understand the various types of unemployment: frictional, structural, and cyclical

Context for Use

This activity is designed for community college economics students in small to medium class sizes (up to 50 students) in a face-to-face setting. It could also work in a high school economics class.

This is a short, in-class activity that does not require any specific equipment. However, it is necessary to have a method to randomly sort students into three separate groups.

Students do not need any prior knowledge of labor force concepts prior to engaging in this activity. However, basic knowledge of terms such as 'civilian labor force' and 'discouraged workers' may lead to more robust post-activity discussion.

Description and Teaching Materials

- Upon entering class, each student is sorted into one of three groups: green, pink, or yellow (e.g., a mug of green, pink, and yellow pencils can be in the front of the class and each student is asked to take a pencil as they enter the classroom); Alternately, they could just pick a slip of paper (either green, pink, or yellow) upon coming into class
- Green represents EMPLOYED people in our economy, this should be the LARGEST group in the class (to ensure this is the largest group, I make sure I have more green pencils in the mug)
- Pink represents the UNEMPLOYED people in our economy
- Yellow represents people that are NOT in the labor force in our economy.
- NOTE: Students should NOT be told the meaning of each color (they will have to figure this out as part of the exercise)
- Students break into color-coded groups (e.g., all students with a green pencil meet in the front, right corner of the room, etc.)
- One student from each group is chosen to be the group leader. This student is given the instruction sheet and the bag of color-coded slips of paper.
- Per the instructions, each student takes a piece of paper. When every student in the respective group has a piece of paper, they read the paper out loud to their entire group.
- As a group, the students must answer the questions that are on the instruction sheet.
- The teacher acts as the facilitator: going to each group to make sure they are following the instructions and answering the questions.
- The groups are dismissed to their regular seats (taking their slips of paper with them).
- The lead student from each group goes to the front of the class with their completed instruction sheet.
- The teacher asks them to describe what each member of their group has in common and then asks for the total of the group and the subcategories.
- The teacher uses this information to calculate:
o The labor force
o The labor force participation rate
o The official unemployment rate and a broader measure of unemployment
- And to discuss:
o The meaning of civilian labor force and who is counted as being a member of the labor force
o What has been happening to the labor force participation rate over time
o Who is considered unemployed and how the underemployed and part-time workers are counted
o The various types of unemployment (frictional, cyclical, structural and even seasonal)
o The meaning of discouraged workers and other reasons why the official unemployment rate may understate the level of unemployment in the economy
Instructions for EMPLOYED group (Microsoft Word 2007 (.docx) 15kB Jan11 14)
Examples of EMPLOYED people (Microsoft Word 2007 (.docx) 17kB Jan11 14)
Instructions for UNEMPLOYED group (Microsoft Word 2007 (.docx) 16kB Jan11 14)
Examples of UNEMPLOYED people (Microsoft Word 2007 (.docx) 18kB Jan11 14)
Instructions for NOT in LABOR FORCE group (Microsoft Word 2007 (.docx) 16kB Jan11 14) 
Examples of not in labor force (Microsoft Word 2007 (.docx) 16kB Jan13 14)

Teaching Notes and Tips

This activity takes a bit of pre-work. Documents need to be printed and cut prior to class.


Students should be able to define the civilian labor force, the labor force participation rate, the unemployment rate, and who is considered to be unemployed. They should also be able to briefly discuss the impact discouraged workers, the under-employed and part-time workers would have on the unemployment rate. Lastly, they should be able to list the various types of unemployment.