It’s easy to define employment: you’re employed if and only if you have a job. Employment is the total number of people currently employed, either full time or part time.

Unemployment, however, is a more subtle concept. Just because a person isn’t working doesn’t mean that we consider that person unemployed. For example, as of October 2014, there were 41.8 million retired workers in the United States receiving Social Security checks. Most of them were probably happy that they were no longer working, so we wouldn’t consider someone who has settled into a comfortable, well-earned retirement to be unemployed. There were also 11 million disabled U.S. workers receiving benefits because they were unable to work. Again, although they weren’t working, we wouldn’t normally consider them to be unemployed.

The U.S. Census Bureau, the federal agency tasked with collecting data on unemployment, considers the unemployed to be those who are “jobless, looking for jobs, and available for work.” Retired people don’t count because they aren’t looking for jobs; the disabled don’t count because they aren’t available for work. More specifically, an individual is considered unemployed if he or she doesn’t currently have a job and has been actively seeking a job during the past four weeks. So unemployment is defined as the total number of people who are actively looking for work but aren’t currently employed.

A country’s labor force is the sum of employment and unemployment—that is, of people who are currently working and people who are currently looking for work, respectively. The labor force participation rate, defined as the percentage of the working-age population that is in the labor force, is calculated as follows:

The unemployment rate, defined as the percentage of the total number of people in the labor force who are unemployed, is calculated as follows:

To estimate the numbers that go into calculating the unemployment rate, the U.S. Census Bureau carries out a monthly survey called the Current Population Survey, which involves interviewing a random sample of 60,000 American families. People are asked whether they are currently employed. If they are not employed, they are asked whether they have been looking for a job during the past four weeks. The results are then scaled up, using estimates of the total population, to estimate the total number of employed and unemployed Americans.