The unemployment rate and the labor force participation rate measure two different things, and reading one without the other can be misleading. The unemployment rate is the share of people in the labor force who are looking for work but cannot find it. The participation rate is the share of the working age population that is in the labor force at all, whether they are employed or actively looking.

What the unemployment rate actually counts

The headline unemployment rate, which the Bureau of Labor Statistics calls U-3, counts only people who do not have a job, are available to work, and have actively looked for work in the previous four weeks. Someone who has given up searching, or who wants full time work but can only find part time hours, is not counted as unemployed in that number.

That definition is narrower than most people assume. It is why the official rate can look healthy even when large groups of people are struggling to find the work they want. In September 2026, the most recent month published, the U-3 rate was 4.2 percent, up from 4.1 percent in August.

Where the numbers come from

These rates do not come from counting everyone. The unemployment and participation rates are built from the Current Population Survey, a monthly survey of about 60,000 households carried out for the Bureau of Labor Statistics. Interviewers ask whether people worked in the reference week, and if not, whether they looked for work in the previous four weeks and were available to start. The payroll figure, the count of jobs added, comes from a separate survey of employers. Because the two use different methods, they can tell slightly different stories in any single month, which is one more reason to read the labor market from several numbers rather than one.

U-3 vs U-6: the narrow and broad rates

The Bureau of Labor Statistics publishes six measures of labor underuse, labeled U-1 through U-6, in a table released with every monthly jobs report. U-3 is the official rate. U-6 is the broadest. It adds two groups the headline number leaves out: people who are marginally attached to the labor force, including discouraged workers who have stopped looking, and people working part time who would prefer full time hours.

Because it captures that slack, U-6 is always higher than U-3. In September 2026 U-6 stood at 7.6 percent, down from 7.7 percent in August, against the 4.2 percent U-3 rate. The gap between the two is a quick read on how much hidden underemployment sits beneath the headline. When U-6 rises faster than U-3, more people are stuck in part time work or drifting out of the active job search even though the official rate looks steady.

What the labor force participation rate measures

The labor force participation rate answers a different question: of everyone aged 16 and over who could work, how many are either employed or actively looking. It does not care whether people have jobs, only whether they are in the labor force at all. In September 2026 the participation rate was 61.8 percent.

Participation moves slowly and for reasons that have little to do with the month to month economy, including the aging of the population, school enrollment, caregiving and retirement. That makes it a useful counterweight to the unemployment rate, which can be distorted by who is counted as actively looking.

Why the two can move in opposite directions

Here is the trap the two numbers set together. The unemployment rate can fall for a good reason, because unemployed people found jobs, or for a worrying reason, because people stopped looking and were no longer counted in the labor force at all. In the second case the headline rate improves while the participation rate drops, and the job market is weaker, not stronger.

That is why economists rarely judge the labor market from the unemployment rate alone. They read it next to participation, next to U-6, and next to how many jobs the economy actually added. In September 2026, nonfarm payrolls rose by 29,000, a modest gain that sits behind these rates. To see how all of this is reported each month, our explainer on the jobs report walks through the release in order.

What the latest figures show

Putting the September 2026 numbers together gives a clearer picture than any single figure. The official U-3 rate was 4.2 percent and ticked up from the month before. The broad U-6 measure was 7.6 percent and edged down. Participation was 61.8 percent. Payroll growth was slow at 29,000. That mix describes a labor market that is softening at the edges rather than one that is either booming or in a slump, and it is the kind of reading that feeds into how the Federal Reserve thinks about the economy. For the wider backdrop, see what a recession is and who declares one.

What to watch

Watch three things each month. First, whether a falling unemployment rate is matched by rising or steady participation, which tells you if the improvement is real. Second, the gap between U-3 and U-6, which shows how much part time and discouraged slack is building. Third, the trend in participation for prime age workers, those 25 to 54, which strips out most of the retirement effect and is a cleaner read on underlying demand for workers. No single number tells the story on its own.