The unemployment rate does not include people who gave up looking for jobs.
People who do not have a job and feel discouraged enough to give up looking for jobs after not being able to find one are not included within the unemployment rate. Only people that are able to work and are actively searching for a job are defined as 'unemployed'. On the other hand, people that have stopped their job search are considered to be outside the labor force. They are known as 'discouraged workers' since they usually feel that they do not have the necessary qualifications to get a job or that they are too young or too old to find one.