Learning Targets: 1. The student will understand major economic indicators. 2. The student can identify and explain economic indicators such as the GDP, CPI and the Unemployment Rate. Today’s indicator: The Unemployment Rate

Macroeconomic Goals 1. Full Employment – an unemployment rate low enough so people can find jobs, but not so low as to cause wages to go up. 2. Price Stability – Average prices stable or slowly increasing. Economic Growth – The GDP Per Person increasing at a stable rate but not growing so much as to increase prices.

UNEMPLOYMENT

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Obviously… …unemployment means that you are out of work– laid off….fired…downsized…out of a job. While this state may signal a “new beginning”, it is usually not a pleasant status.

For the Government, “The Unemployed” is: The portion of the labor force that is not working but is willing and able and has actively looked in the past 30 days. or The percentage of the labor force actively seeking work after looking during the past 30 days. Natural Unemployment Rate = 4-6% (Lowest rate w/o causing inflation)

EMPLOYED NOT in Labor Force UNEMPLOYED U.S. POPULATION: Under 16 Institutionalized Retirees Military FT Students Stay-at-Home Parents Discouraged Workers Labor Force Non-Labor Force

Or, as Khan Academy explains, 0/02/khan-academy-how-to-calculate-the- unemployment-rate.html 0/02/khan-academy-how-to-calculate-the- unemployment-rate.html This is a 2010 Khan video made for PBS Newshour.

Now let’s practice by calculating a classroom unemployment rate… Form groups of approximately 4 – 5 persons with the people right around you. Choose a secretary (to write down the numbers) and a spokesperson.

Take the role given to you and be ready to apply the questions of unemployment to that or those persons.

For each identity given… 1.Are you currently working at a job outside of school… 2.If not, are you not working by choice – does not want a job… 3.Or, not working, no job, but gave up looking. 4.Or, not working, no job, and has actively (applied, interviewed, gone in?) looked in the past 4 weeks.

Total up – for your group…and have your reporter tell us… 1. # of people who currently have a job. 2. # of people who have no job, but have actively looked in the past 4 weeks. ………………………………………………… # of people who gave up. # of people who don’t want a job.

Total the numbers from the Smartboard… Calculate our classroom unemployment rate by adding the employed to those actively looking for work and not finding it, and then… Divide the # actively looking and not finding a job by the total from above.

Current U.S. Unemployment Rate The “U-3” unemployment rate- the most commonly reported rate is calculated by the Bureau of Labor Statistics (BLS) and can be found at This rate is reported on the first Friday of the month for the previous month. Last Friday the rate for October was reported as 5.8%, up.1% from September.

Minnesota is almost always lower than the nation’s average. Minnesota: 5.1% (August, 2013) Twin Cities: 4.7% (August, 2013)

Nationally, the unemployment problem hits some states harder than others, and some counties harder within states. Which state(s) have the lowest (best) unemployment situation? Can you suggest why? Minnesota 10/ % TC = 3.6%

The counting system presents some problems, so other rates try to correct. The U-6 adds in those person who are working part-time, but want full time work, and those who are considered “discouraged workers”- those who gave up looking. Current U-6: 13.8% (October, 2013) up.2% from September.

Discouraged workers are ignored! This means people who do not look for work are not counted. Involuntary part-time workers are considered as working and in the labor force. Problems with the Unemployment Rate as an Indicator of Economic Health

Economists identify four types of unemployment. The first three – frictional, structural, and seasonal unemployment – can exist even in a growing economy. The fourth, cyclical unemployment, emerges during an economic downturn. Types of Unemployment Example: Tina quits her job because she is unable to get the hours he wants. She is confident she will be able to find another job. Example: Megan’s factory job is eliminated when a new machine is invented that does not require human labor. Example: Mike is temporarily laid off from his lifeguard job during the cold Minnesota winter months. Example: Bob is laid off from his job at a coffee shop when a recession causes a large decrease in the demand for coffee.

Frictional Unemployment eature=player_detailpage&v=Eaqc C5zZ5Fc eature=player_detailpage&v=Eaqc C5zZ5Fc

Structural Unemployment rks/ rks/

Cyclical Unemployment

How do these unemployment data help to explain what you see in the photograph? Based on these data, what generalizations can you make about the health of the U.S. economy during the Great Depression?

What field are The government is MOST concerned with cyclical unemployment and takes steps to correct it.

“The best cure for unemployment is economic growth.”

Lost potential output – Produce inside PPC Economic cost for families – Lost income, medical benefits, etc. Societal cost – Loss of income taxes – Unemployment pay/benefits The Economic Costs of High Unemployment

Let’s practice looking at some data… During which of these years was the unemployment rate the lowest? The highest? Based on what you know about the unemployment rate and how it’s determined, what might explain the rise in unemployment before 1933? What might explain the decrease in unemployment after 1940? What might explain the fluctuations between 1933 and 1940?

How do these unemployment data help to explain what you see in the photograph? Based on these data, what generalizations can you make about the health of the U.S. economy during the Great Depression?

Go to the worksheet provided: Look at the graphs on the worksheet and answer the questions for each.