Unemployment

1. Measuring Unemployment:

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a. Census bureau surveys roughly 50,000 people per month, in 2,000 counties; across all 50 states to gain a sample number that they hope is reflective of the entire nation. b. hey!re loo"ing for #hat they consi$er unemployed. %o #hat is e&actly fits the $efinition'

i. (eople available for #or" #ho ma$e a specific effort to fin$ a )ob $uring the past month* (+U% ii. ,n a$$ition, they have to have #or"e$ for less that one hour for pay or profit in one #ee". iii. ,f you #or"e$ in the family business #ithout pay for less than fifteen hours a #ee", you!re unemploye$. 1. More than 15 - #elcome to the official #or"force... c. his $ata is turne$ over to the /+%, an$ is publishe$ once a month.

$. 0ith it, they figure out the UNEMPLOYMENT RATE. i. his is $one by $ivi$ing the total number of unemploye$ in$ivi$uals by the total number of persons in the labor force. here is usually a $irect relationship bet#een unemployment an$ an economic recession. 0hat is that'

ii.

2. +,M, 1 ,23% 24 56 U36M(+27M63 81 6: a. he unemployment rate understates unemployment for three reasons: i. ,t $oes not count those #ho have become too frustrated or dis oura!ed to loo" for #or". 1. +abor force 9$ropouts* can measure 1:2 million $uring recessionary perio$s.

2.

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;. 6vent though they are not #or"ing, they are not classifie$ as unemploye$ because they $i$ not try to fin$ a )ob #ithin the previous four #ee" perio$.

ii. ,t $oesn!t consi$er the Underemployed 1. his is someone #ho is #or"ing part time. <even as little as an hour a #ee"=

2. %omeone #ho lost a high:paying )ob, but is #or"ing an hour a #ee" at an crappy minimum:#age gig is still consi$ere$ employe$. iii. ,t $oesn!t consi$er those #ho simply $on!t care to ever fin$ a tra$itional )ob, or for that matter a )ob at all. 1. his can range from the noble - stay:at:home mom>$a$, or a family member #ho ?uit a )ob to ta"e care of a love$ one@ to the laAy - the fat sac"s of fat you see on 95ere Comes 5oney /oo /oo*.

B,%C2U81C6B 028D68%: (eople #ho are #illing an$ able to engage in pro$uctive activities, but $ue to their over#helming lac" of success have stoppe$ see"ing employment. Biscourage$ #or"ers believe that any effort to fin$ a )ob #ill be fruitless. Biscourage$ #or"ers fall #ithin the broa$er category of marginally:attache$ #or"ers, people #ho are #illing an$ able to #or", #ho have either hel$ a )ob or searche$ for employment #ithin the last year, but are not actively see"ing employment. (eople are marginally attache$ to the labor force for a variety of reasons, $iscourage$ #or"ers achieve their $esignation because they believe search efforts #oul$ not be #orth#hile.

he /ureau of +abor %tatistics </+%= officially $esignates someone as a $iscourage$ #or"er if they have not

been actively see"ing employment for one of the follo#ing reasons: <1= they believe there are no )obs available in their area or line of #or", <2= they )ust coul$ not fin$ #or", <;= they feel that they lac" the s"ills, training, or e$ucation nee$e$ for available )obs, <E= they thin" employers feel they are too young or too ol$, or <5= they feel they are sub)ect to some other type of $iscrimination.

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(eter (an"ovic provi$es an e&ample of a $iscourage$ #or"er. (eter once ha$ a )ob, a #ell:paying )ob at the 5y4y 6lectronics Company <a lea$ing recor$:player manufacturer=. /ut #hen 5y4y 6lectronics Company #ent

ban"rupt, (eter lost his )ob an$ has not been able to fin$ another. Buring the first si& months of unemployment, (eter actively searche$ for other )obs. /ut none #ere foun$. %o he simply gave up. 2ver the past year, (eter has resigne$ himself to sleeping on his sisterFs sofa an$ eating left over piAAa crust. 5e #oul$ li"e to #or". 1n$ some$ay he #ill once again see" employment. /ut for no#, he $oes nothing. iv. 0hat else $oes unemployment not consi$er, that may in fact re$uce the unemployment rate' 1. Un$ergroun$ activity

2. Din$s of Unemployment:

a.

"ri tional unemployment occurs #hen #or"ers are bet#een )obs.

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i. ii.

he government an$ economists believe that these #or"ers are short:term unemploye$ an$ #ill suffer little economic har$ship from their lac" of employment. his often inclu$es young #or"ers - gra$uate$ stu$ents - #ho are searching for their first )ob<s=.

iii. #.

/ecause there are al#ays some #or"ers #ho are in the process of changing )obs, there #ill al#ays be frictional unemployment.

$tru tural Unemployment% i. his occurs #hen a fun$amental change in the economy re$uces the $eman$ for #or"ers an$ their s"ills. &. Mi hi!an ' (ars ' "orei!n (ompetition ).(on!ress* de ision to lose some military #ases. +.,or-ers are for ed to de.elop new s-ills or mo.e to other re!ions.

(y li al Unemployment i. 8elate$ to changes in the business cycle: &. Lay/offs durin! re essions. ).0irin!s durin! e1pansions.

d. $easonal Unemployment i. 8esults from changes in the #eather or changes in $eman$ for certain pro$ucts. 1.%ummer la#n cre#s 2.0inter sno# plo#s. ;.Comerica (ar" (eanut Gen$ors. E.Beer processors. 5.Crab 4ishermen. e. Te hnolo!i al Unemployment i. echnological improvements ma"e some )obs obsolete. 1.8obots replace some auto#or"ers. 2.Hapan uses 1>5th the human labor force on assembly lines as 1merican businesses $o. ;.1 Ms replace ban"ers. E.U:%can replaces grocery cashiers. 5.,nternet replacing some retail outlets.

;. he concept of 4ull employment: a. 4ull employment is the lo#est possible unemployment rate #hen the economy is gro#ing an$ all factors of pro$uction are being use$ as efficiently as possible. b. 4ull employment is achieve$ #hen the unemployment rate falls belo# E.5I.