Interactive widget exploring labour force composition, participation rates, and the hidden dimensions of unemployment measurement
You can have falling unemployment and rising underutilisation
The headline unemployment rate is just one slice of a three-part population: employed, unemployed, and not in the labour force. Movement between these categories — and who gets counted where — determines both the participation rate and the underutilisation rate. Set the participation rate, unemployment and underemployment to recompose the labour force and watch how the official rates respond. They start close to recent Australian figures.
Labour force composition
67% participation
Each dot is a person aged 15 and over. Pink: employed (hours they want) · amber: underemployed · white: unemployed · grey: not in the labour force.
Of all people 15+: 64% employed · 3% unemployed · 33% not in labour force
50%65%80%
0%8%16%
0%8%16%
Unemployment rate
4.5%
Underutilisation
10.4%
The official unemployment definition requires active job search in the past four weeks. This measurement design creates systematic blind spots: discouraged workers who've stopped searching disappear from the labour force entirely, shrinking both the numerator and denominator. A person working one hour per week counts as employed, not unemployed. Marginal attachment and underemployment vanish from the headline rate. This is why rising employment can coincide with falling participation — workers exit the labour force faster than jobs are created — and why the unemployment rate can fall while labour market slack actually increases.
Know This
The participation rate determines who enters the unemployment calculation, while underutilisation captures the unemployed plus underemployed — revealing labour market slack the headline rate systematically hides.