Unemployment
Measuring Unemployment Civilian Labor Force The sum of all persons age 16 and above who are either employed of actively seeking employment The measure excludes members of the military People in jail, mental health facilities, or disabled are also not counted in the numbers
Measuring Unemployment Unemployed Persons The process of determining who is unemployed is complicated The Census Bureau figures out how many people are employed versus how many people are actively looking for a job “Working” means that a person has invested at least 1 hour into a job within a given week
Measuring Unemployment Unemployment Rate Number of unemployed individuals divided by the total number of persons in the civilian labor force As of December 2017, the unemployment rate was at 4.1%, nearing a 20 year low
Measuring Unemployment
Measuring Unemployment What the Unemployment Rate does not include: Underemployment – People who are not working 40 hours a week People who leave the workforce – When people become frustrated and stop looking for a job, they are no longer counted in the numbers
Sources of Unemployment Frictional Unemployment Workers that are between jobs for a short period of time As long as workers are free to change jobs, some people will be unemployed Structural Unemployment Created by a fundamental change to the economy Outsourcing is a key reason why many manufacturing jobs have been lost
Sources of Unemployment Technological Unemployment Occurs when workers are replaced by machines or automated systems that make skills obsolete Cyclical Unemployment Tied to the Business Cycle When the economy enters periods of recession, many companies decrease the size of their workforce
Sources of Unemployment Seasonal Unemployment Unemployment that occurs as a result of seasonal changes Snow plow drivers are generally useless in the summer months, so employment dips Retail sales employees are used less following the holiday rush and a percentage become unemployed
Cost of Instability GDP Gap Misery Index Uncertainty Difference between Real GDP and Potential GDP Misery Index Sum of the Inflation rate and Unemployment rate Uncertainty When the economy is unstable, it creates a large amount of uncertainty, which hold back investment and growth