Brad Eylander

Econ 212
Wiki paper #1

My grandpa said that economics is “what makes the world go around.” When he said this he
always referred to the macro level of economics, speaking of both the US and international trading.
With knowledge of the US economy and other countries we can learn more about how money is
distributed throughout the world. But what does the flow of money have to do about employment?
Just because a country has a lot of trade and money doesn't mean everyone has a job. Understanding
unemployment in the US and other international countries can help us understand labor-market
conditions and how businesses and people might use them for their advantage.

Before we can discuss the issues in unemployment we must first learn some key words and
concepts when discussing unemployment. An unemployed person is someone who doesn't have a job,
but made effort to find work in the past four weeks. Unemployment rate is calculated finding the labor
force and dividing it by the amount of people employed. The labor force is the amount of people who
are either employed or unemployed, people not in the labor force are those for example, who are full
time students, retired, unpaid homemakers, and people with disabilities that refrain them from working
(Frank 138). When calculating unemployment in the US each month, the federal government's Bureau
of Labor Statistics randomly surveys sixty thousand individuals around the nation (Summers 1). To
calculate the unemployment in other countries the US receives data from other organizations that get
information from around the world such as the Organization for Economic Cooperation and
Development (OECD), the International Labor Office (ILO), and many others (Sorrentino 2). Despite
the effort to find unemployment there are still some miscalculations that happen in the process.

In calculating unemployment in areas there are issues in finding the correct percentage of
people unemployed. Two key words when discussing the calculating issues in unemployment are one,
discouraged workers: people who want to work, but haven't made an attempt in the past 4 weeks; and
two, involuntary part-time workers: people who have a part-time job, but can't get a full-time job. The
first error in calculating unemployment are people known as discouraged workers, who use the excuse
that in the past they weren't able to find a job so they just stop trying. Therefore, their counted in the
out-of-labor force, when really looks like it should be unemployment. A second miscalculation are the
involuntary part-time workers, which are counted as employed, but to them and their situation, they
seem to be unemployed (Frank 141). The last issue is when recording the unemployment data there are
issues in the different types of employed people, those who are self-employed and homemakers. When
surveying the people, those counted as employed are people in a company with a payroll. The survey
does cover a lot of ground, however it still misses a lot of people s(ie homemakers), and areas that are
misrepresent the rate of employment when the number of self-employed persons hits extremes
(Mahorney 9). Although it may seem very incorrect when calculating unemployment, the information
that can be gained is still beneficial to help understand how to avoid it.

When comparing unemployment in the US to other industrialized countries such as the Western
Europe, they all have about the same with an unemployment rate of about 5-9% (Unknown2 1st table).
The country that has a lowest unemployment rate is UK with an unemployment rate of 5.2%, as of
2002 (Tran 9). Strangely enough, the UK also has low inflation, which is rare because usually when
unemployment goes down inflation goes up. The reason for the low unemployment rate in these high
industrialized countries is because technology is getting better, allowing industrial trading easier and
cheaper, providing jobs and resources for many people throughout the world. However, due to the
technology increase, more skilled workers are required to do the job, leaving much unindustrialized
countries 'out-of-the-loop'. For example, South Africa, not having many well educated people has an
unemployment rate of 25% (Unknown 1st table)! Wages vary in the US due to the different skills or
education people have.

Income in America and many other countries depend on the quality of work someone puts in,
quantity of people -less people doing one job may get paid more then multiple people doing the same
job-, need of a skill an individual can do, and influence -people who know the right people can get paid
more-. Countries with high industrialized economies usually have a higher minimum wage, such as
US: $7.25/hour, UK: $6-10/hour, France: $11.43, etc (Public) and countries with low minimum wages
is India: $0.13-0.28/hour, China: $43-61/month. Because India and China have such low minimum
wages many big companies expand there businesses in the area to hire people with low wages. This
creates an outsourcing of jobs because the people that can be employed in other higher income areas
wont be able to work, the major companies don't want to pay more then they have to for an employer.

Unemployment statistics throughout the world helps us better understand how to help and how
to avoid major unemployment issues in the US. Although Europe is a little less industrialized then the
US, it still has the same if not better unemployment rates. Looking at the data economists think that the
low unemployment rate in the European area is because of high minimum wages, union contracts, and
other factories may have created a floor wage that workers would accept (Frank 232). Knowing this,
the US can also try to do the same and help reduce unemployment. To avoid an increase in
unemployment, statistics show that countries with less education and skilled men have high
unemployment rates. Keeping high education and skills training can ensuring that the unemployment
rate in the US is low.

As you can see, learning more about unemployment in the US and international countries can
help us better understand how to help the problem. To review, the high industrialized countries such as
the US and the European countries have low unemployment and high minimum wages, while countries
that aren't as far along with technology and education tend to be the ones with high unemployment and
low minimum wages. However, despite the evidence to show that poor countries are having trouble in
this day and age, the low minimum wages are of very big use to major companies from industrialized
countries move part of their company over to the low industrialized country to hire people that will
work for less. Thus creating more opportunity for a small poor country to become more wealthy and
more industrialized. Unemployment, although it may be a tough issue, the answer to it is education.
The more people know the more they can excel in technology and the more they can excel in
technology the better they fix things such as unemployment

Works Cited:

“The Unemployment Rate,” Robert H. Frank and Ben S. Bernanke’s - Principles of Macroeconomics,
3rd edition, 2007.

“Unemployment,” Lawrence H. Summers, The Concise Encyclopedia of Economics, 2002.

URL: <http://www.econlib.org/library/Enc/Unemployment.html>

“International unemployment rates”, Constance Sorrentino, Monthly Labor Review, June 2000.
URL: <http://www.bls.gov/opub/mlr/2000/06/art1exc.htm>
"Surveying the Employment Rate", Mark Mahorney, Investopedia: A Forbes Media Company, 9-22-04
URL: <http://www.investopedia.com/articles/04/092204.asp>

“Unemployment,” Mark Tran, Guardian Unlimited, May 15th 2002

URL: <http://www.guardian.co.uk/theissues/article/0,,650797,00.html>

"Economic and financial indicators", Author Unknown, Economist, 5/5/2007, Vol. 383 Issue 8527,
p121-122, 2p, 5 charts, 2 graphs.
URL: <http://moe.ic.highline.edu:2212/ehost/detail?vid=1&hid=17&sid=70d8c2cc-f213-4ef1-92eb-
bf8637e1cec3%40SRCSM2>

"Comparative Unemployment Rates", Author Unknown 2, U.S. Department of Labor, Bureau of Labor
Statistics, July 6, 2007.
URL: <ftp://ftp.bls.gov/pub/special.requests/ForeignLabor/flsjec.txt>

“List of Minimum Wages by Country”, Public, Wikipedia.

URL: <http://en.wikipedia.org/wiki/List_of_minimum_wages_by_country>