Letter: 'Would I Be Considered Unemployed?' : Planet Money A listener asks. Economist Howard Rosen answers.
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Letter: 'Would I Be Considered Unemployed?'

Greg J. from Minnesota writes:

I have a quick question sparked by the unemployment discussion early in your January 8th podcast: how are entrepreneurs counted? I assume that, if I lose my job, then decide to start my own business instead of looking for work, I'll not be considered part of the group looking for work, correct? Would I be considered employed? If so, I wonder how I'd count vis a vie fully employed vs. underemployed - would it depend upon how well my new business was doing?

Economist Howard Rosen answers:

In order to be considered unemployed a worker must be (1) available, (2) able and (3) searching for work. If your listener starts his own business and stops looking for work, he technically is not counted as unemployed; he is counted as self-employed. In fact, you do not have to receive a salary in order to be considered "employed." Employment determination is not affected by how well a business is doing. Once a person begins looking for work again, he/she would be considered unemployed, even though they were not technically laid off.

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