Economic Challenges: Unemployment.

Essential Standards The student will explain how unemployment is calculated. The student will identify structural, cyclical and frictional unemployment.

The Unemployment Rate The unemployment rate is measured each month. The unemployment rate is measured each month. The US unemployment rate as of May, 2008 was 5.5%... The US unemployment rate as of May, 2008 was 5.5%... December, %... December, %... March, %... March, %... Nov, %... Nov, %... March %... March %... October %... October %... March %... March %... October … October … March %... March %... October, % October, % This measurement is a key measure of economic health. This measurement is a key measure of economic health.

Some Sub-Categories High School Dropouts: 12.4% High School Dropouts: 12.4% High School Graduates: 8.3% High School Graduates: 8.3% College Graduates: 4.0% College Graduates: 4.0% White Males: 6.7% White Males: 6.7% White Females: 7.0% White Females: 7.0% Black Males: 14.0% Black Males: 14.0% Black Females: 11.9% Black Females: 11.9% Hispanic/Latino: 10.3% Hispanic/Latino: 10.3% Asian: 5.9% Asian: 5.9%

Measuring Employment Bureau of Labor Statistics—conducts a survey of 50,000 each month… This represents the US population… Based on these interviews, the BLS computes the… Unemployment rate— the percentage of the work force that is unemployed.

Which of the following individuals would be considered a part of the American work force? A.) a retired Army sergeant who draws a large pension from the government. B.) a 17 year-old student who is trying to find a part-time job. C.) a 15 year-old student who waits tables for 25 hours/week. D.) a laid-off accountant who is living off his savings and traveling the world.

You Are Employed… If you meet ANY of these criteria: 1. You have worked for pay for one or more hours this week… 2. You have worked at a family business without pay for 15 or more hours. 3. You have job, but have been absent for vacation, illness, etc.

You Are Unemployed… 1. If you don’t meet any of the preceding criteria… 2. And if you’ve been actively looking for work during the past 4 weeks.

Types of Unemployment: Frictional Includes three types of workers: People who have decided to leave one job to look for another… New entrants to the labor force… Re-entrants to the labor force. Economists consider this type of unemployment to be HARMLESS.

Structural Unemployment Structural unemployment occurs as a result of two situations: Workers who lose their job as a result of NEW TECHNOLOGY… And workers who lose their job as a result of changes in CONSUMER PREFERENCES. Although there are always WINNERS and LOSERS… Economists also consider this type of unemployment to be HARMLESS.

Cyclical Unemployment Cyclical unemployment occurs when the economy COLLAPSES— During WHICH phase of the business CYCLE? The CONTRACTIONARY phase. This situation arises when people can’t find jobs… BECAUSE THERE ARE NO JOBS.

Which of the following individuals would be considered frictionally unemployed? A.) a 28 year-old veteran who has returned from duty in Afghanistan and is trying to find a job in the defense industry. B.) a typist who is fired for her inability to master new computer technology. C.) the former employees of Borders Bookstores.

Which of the following individuals would be considered structurally unemployed? A.) a recent graduate of Kennesaw State University who is trying to find a job in city engineering. B.) a former major league baseball player who is trying to break back into the big leagues. C.) the employees at a repair shop that specializes in VCR repair.

Which of the following individuals would be considered cyclically unemployed? A.) a recent parolee from Coastal State Prison in Savannah, Georgia. B.) a former accounts manager at Wachovia. C.) the former employees of the CD Wherehouse.

Levels of Employment Full employment—no cyclical unemployment exists (but other categories do). Underemployment—working at a job for which you are overqualified... Or working part-time when full time is desired. Discouraged workers—have given up looking…and do not appear in the unemployment rate. When underemployed and discouraged workers are accounted for, the so-called “underutilization rate” climbs to… 14.7%.