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Unemployment 13.1. Why should our nation be concerned about unemployment? Gauges the economic health of a country by tracking the number of people who are out of work. High rates can hurt the economy; Nation loses goods and services Businesses lose sales Government support of unemployed
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Unemployment 13.1 Why should our nation be concerned about unemployment? • Gauges the economic health of a country by tracking the number of people who are out of work. • High rates can hurt the economy; • Nation loses goods and services • Businesses lose sales • Government support of unemployed • Societal consequences of unemployment?
Unemployment 13.1 • Measuring Unemployment • Census Bureau conducts surveys and collects monthly information on: • How many people unemployed? • How long been jobless? • How does it affect different regions of the country? • How does it affect different industries? • Bureau of Labor Statistics publishes results.
The Labor Force • Classified as part of the labor force if: • Are 16 years of age • Are actively looking for work • Worked for pay one or more hours • Worked w/o pay in family business 15 hours or more. • Have a job but did not work because of illness, weather, vacations, labor disputes. • Are not in the military or institutionalized
Labor Force • Labor Force Participation Rate # of people in the labor force population
Calculating Unemployment • Unemployment Rate—The % of people in the civilian labor force who are unemployed but actively seeking employment. # of people unemployed # of people in the labor force
4 Categories of Unemployment • Frictional • Structural • Seasonal • Cyclical
Types of Unemployment 13.1 • Four Categories of Unemployment: • Frictional—Workers moving from one job to another job. Voluntary or involuntary. Quit (between jobs) Laid off – because of issues within the company Fired Looking for employment after a long voluntary break
Types of Unemployment • Structural – Occurs when workers’ skills do not match those needed for the jobs that are now available Development of new technology Discovery of new resources Changes in consumer demand Globalization/Outsourcing Lack of education
Types of Unemployment • Seasonal—Fluctuates from season to season Farming Construction Even professional athletes and teachers become seasonally unemployed. • Cyclical—Results from recessions and economic downturns. Long term pattern.
Weaknesses of theUnemployment Rate • Discouraged Workers—people who once held jobs but have given up actively looking for work. However, they want to work and are open to accepting jobs that are offered. • Under-employed—Represents wasted resources and lost output. • Recent college grad who cannot find a job and must wait tables. • An engineer who works as a construction worker • A factory worker that wants full time hours but is only working part time
Full Employment • Full Employment – • Approximately 4-6% unemployment rate is considered normal • Almost everyone who wants a job, has a job • When no cyclical unemployment exists • Healthy, fully functioning economy