Unemployment Overview Economics (CP)Mr. Joshi

Why is unemployment a big issue for a nation?

Homework for next class – Please copy 1. What five job characteristics would make a job a "great job" for you? Ex. Low probability of death on the job. 2. Write down at least two jobs that would fit those five characteristics. 3. Write down at least three jobs that you wouldn’t do, even for $250,000 a year.

Four Kinds of Unemployment Frictional Unemployment – Stems from voluntary quits by employees who are looking for better jobs. Seasonal Unemployment – Stems from work that exists only during part of the year – migrant fruit workers, tax counselors, Santa Clauses Cyclical Unemployment – Stems from work that goes away during recessions but comes back when times improve. Structural Unemployment – Stems from work that has been outsourced and/or automated and will never come back.

Unemployment Insurance For all kinds of unemployment (except quits, retirements, or discharges (getting fired), there in unemployment insurance. In most states, including CT, you can qualify for 26 weeks of benefits. Your benefit is calculated as follows: Take half of your annual salary and divide it by 26. That is your weekly salary. In CT, the maximum weekly salary is $573.00

Defining Unemployment The basic concepts involved in identifying the employed and unemployed are quite simple: – People with jobs are employed. – People who are jobless, looking for jobs, and available for work are unemployed. – People who are neither employed nor unemployed are not in the labor force.

Unemployment Rate Unemployed = _________________________________ Labor Force (Unemployed + Employed)

How do we know the unemployment rate? “…the Government conducts a monthly sample survey called the Current Population Survey (CPS) to measure the extent of unemployment in the country…There are about 60,000 households in the sample for this survey. This translates into approximately 110,000 individuals…” The Bureau of Labor Statistics (BLS) which conducts the monthly survey is 90% sure that the sample is representative of the nation overall.

Unemployment Rate Exercise Each member of the class will read the slip of paper they took and we’ll calculate the class’s unemployment rate.

1. I reported to the interviewer that last week I worked 40 hours as a sales manager for the Western Beverage Company. 2. I lost my job when the local plant of the Chariot Aircraft Manufacturing Company was closed down. Since then, I has been visiting personnel offices of other businesses in town trying to find a job. 3. I’m a homemaker. Last week, I was occupied with her normal household chores. I’m not looking to get a job – my young children keep me busy. Our family gets by on my partner’s salary. 4. I receive disability payments from the federal government after I broke my back three years ago in a workplace accident.

5. I’m on maternity leave since I just gave birth to my baby son. I am on leave from my job as a teacher. 6. I didn’t go to work for the past week because my work was without power due to the snowstorm. I work in an insurance company. 7. I’m a full-time student at MCC studying for a 2-year nursing degree. 8. I work two part-time jobs – one at Highland Park Market as a cashier, and the other at Starbucks.

9. I’m in a mental asylum for my own protection. If released into the public, I would become a threat to injure myself. 10. I’m a soldier in the U.S. Armed Forces, and am currently stationed in Afghanistan. 11. I just graduated from college but because I didn’t find a good job, I’m living at home with my parents. In the past four weeks, I’ve thought about looking for a job but haven’t made any specific efforts. 12. Because my kids are now in school, I’m looking for a job that will still allow me to be there when the kids are home. I’ve been checking online ads and at the library for secretarial jobs. 13. I’m trained as a stage actor and singer. I wait tables to make ends meet when I’m not hired for acting or singing.

14. I’m currently incarcerated in a minimum security prison in Mansfield, CT. I do work at the prison laundry everyday. 15. I’m a college student who works under-the- table mowing lawns for my uncle’s landscaping business. 16. I’m a high school student who is looking for work somewhere in the mall. 17. I’m tired of looking for work. Due to my old age, I am never given a chance. My social security check isn’t enough but I quit trying to find work. 18. I have been checking for openings at a local superstore for each of the past 3 weeks, but last week I couldn’t keep looking for work due to the flu. Source:

What does the exercise show you about the unemployment rate? It totally missed discouraged workers. It doesn’t count “underemployed” workers - part-timers who want to work more. It doesn’t count work done for free (charity) or as part of families (homemakers) So, is it too high or too low?

August, 6 th, 2011 – New York Times