Unemployment

1. Frictional Unemployment 4 Types of Unemployment 1. Frictional Unemployment “Temporarily unemployed” or being between jobs. Individuals are qualified workers with transferable skills but they are not working. Examples: 2

4 Types of Unemployment 2. Seasonal Unemployment Due to time of year and the nature of the job. These jobs will come back Examples: Amazon to Add 100,000 Seasonal Positions

3. Structural Unemployment 4 Types of Unemployment 3. Structural Unemployment Changes in the structure of the labor force make some skills obsolete. (Q jobs supplied > Q jobs demanded) Workers do not have transferable skills and these jobs will never come back. The permanent loss of these jobs is called “creative destruction.” (Why?) ***Also includes jobs that are outsourced Examples: 4

4. Cyclical Unemployment 4 Types of Unemployment 4. Cyclical Unemployment Unemployment that results from economic downturns (recessions). As demand for goods and services falls, demand for labor falls and workers are fired. Examples: 5

For all countries there are three major economic goals: Promote Economic Growth Limit Unemployment Keep Prices Stable (Limit Inflation) 6

How do we calculate the unemployment rate? # unemployed x 100 total labor force

Labor Force Who is in and who is out Labor Force Who is in and who is out? - Willing and able - Between the ages of 16 and 64 - Non-institutionalized - With or without jobs

Full Employment (NRU) Level of employment that occurs when the unemployment rate is at NRU Natural Rate of Unemployment

Full Employment (NRU) WHY? If cyclical unemployment is zero we are at full employment. It is generally thought to be between 94%-96% employment There will always be unemployment. WHY? Currently the U.S. is at _______% unemployment

Problems with Unemployment Data ‘Marginally attached workers’ Discouraged workers Underemployed

Calculate: Unemployment Rate and LFPR http://www.bls.gov/cps/cpsaat01.htm Scenario A Labor Force – 100 million Unemployed – 10 million Employed – 70 million Discouraged – 20 million http://www.bls.gov/cps/cpsaat01.htm Scenario B Labor Force – 100 million Unemployed – 5 million Employed – 70 million Discouraged – 25 million

The Obama Economy

FOX Facts?