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Why should a nation be concerned about unemployment? High unemployment rates can damage the economy, leading to loss of goods and services, reduced sales for businesses, government support for the unemployed, and societal consequences. Measuring unemployment involves surveys by the Census Bureau and data analysis by the Bureau of Labor Statistics, focusing on the number of unemployed individuals, duration of joblessness, regional and industry impacts. The labor force participation rate, calculation of unemployment rate, and identification of four categories of unemployment - frictional, structural, seasonal, and cyclical - form key aspects of understanding labor market dynamics. Full employment, with a normal unemployment rate of 4-6%, signifies a robust economy where most individuals who seek jobs can find employment.
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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
