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Unemployment

Unemployment. Labor force – Anyone 16+ that is willing and able to work (students, housewives and retirees either not willing or not able to work). Unemployment is a lagging indicator.

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Unemployment

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  1. Unemployment Labor force – Anyone 16+ that is willing and able to work (students, housewives and retirees either not willing or not able to work)

  2. Unemployment is a lagging indicator The recession started in December 2007 but unemployment did not start to rise until 6 months later. When the recession is over, it will take about 6 months for unemployment to begin to drop. Why?

  3. Frictional rate of unemployment • It takes time to find a job. • In a market economy, 0% unemployment is not possible • 4 ½ - 5% is the natural rate • The natural rate will always exist as long as people have choice.

  4. Cyclical rate of unemployment • Job loss depending on cycle of business (new home sales are down so construction workers are laid off. When sales pick up, they will be hired back) • Could be seasonal (ski resort)

  5. Structural unemployment  • Unemployed because skills no longer meet job requirements • There are jobs out there but your skills do not match job requirements • Requires retraining in another line of work (more an educational issue than an economic one)

  6. A computer programmer is laid off because of a recession • A literary editor leaves her job in New York to look for a new job in San Francisco. • An unemployed college graduate is looking for his first job.

  7. Seasonal Unemployment • Ski Resort • Lifeguard • Farmer • Season ends and you are out of work until the next season

  8. Underemployed – not employed to your full potential (working part time when you want full time, working a job for less money because you can’t find a job that fits your qualifications)

  9. Advances in technology make the assembly-line worker’s job obsolete. • Slumping sales lead to the cashier being laid off. • An individual refuses to work for minimum wage.

  10. A high school graduate lacks the skills necessary for a particular job. • Workers are laid off when the local manufacturing plant closes because the product made there isn’t selling. • A skilled glass blower becomes unemployed when a new machine does her job faster

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