UNEMPLOYMENT

UNEMPLOYMENT IN AMERICA Unemployment As of September 2007 IN THE WORKFORCE: 153,446,000 EMPLOYED: 146,251,251 UNEMPLOYED: 7,207,000 NOT IN WORKFORCE: 78,997,000 WHAT DOES IT MEAN?????

WITH A PARTNER 1.WHO ARE THE UNEMPLOYED AND HOW DO WE CALCULATE THE UNEMPLOYMENT RATE? 2.WHAT ARE THE LIMITATIONS OF THE UNEMPLOYMENT RATE? 3.DESCRIBE THE 5 TYPES OF UNEMPLOYMENT 4.WHAT IS FULL EMPLOYMENT BY DEFINITION? DO WE REALLY KNOW WHAT FULL EMPLOYMENT IS?

WHO ARE THE UNEMPLOYED? People available for work who… Looked for a job in the last month Worked less than 1-hour for pay in the last week

MEASURING UNEMPLOYMENT Rate is the number of unemployed individuals divided by the total number of persons in the civilian labor force 7,207,000/153,446,000 = 4.7%

MINORITY UNEMPLOYMENT Whites (3.9 percent) Blacks (8.5 percent) Hispanics(5.8 percent) Source: Bureau of Labor Statistics, May 2007Bureau of Labor Statistics BASED UPON THE DEFINITION OF UNEMPLOYMENT, HOW MIGHT WE JUSTIFY THESE STATISTICS???

LIMITATIONS OF THE UNEMPLOYMENT RATE Unemployment rate does not count those who become so frustrated or discouraged that they have stopped looking for work They do not have a job but are NOT classified as unemployed People are considered employed even when they hold part-time jobs

TYPES OF UNEMPLOYMENT 1.Frictional Unemployment a. Unemployment caused by workers who are “between jobs” for one reason or another b. Looking for a better job, got fired, or fresh out of college c. This type will always be present

TYPES OF UNEMPLOYMENT 2.Structural Unemployment a. Occurs when a fundamental change in the operation of the economy reduces demand for workers and their skills b. Technology reduces the need for certain skills (check-out at Fast Food) c. Change in Consumer Tastes – Greater demand for foreign cars has caused lay- offs in US auto-industry d. This type will always be present in an advancing economy

TYPES OF UNEMPLOYMENT 3.C yclical Unemployment a. Unemployment directly related to swings in the business cycle b. During a recession it increases, during expansions it decreases c. Workers that get laid off until the economy recovers and production increases d. Happens in industries like cars, technology, homes, etc.

TYPES OF UNEMPLOYMENT 4.Seasonal Unemployment a. Occurs every year when certain type of work can not be done to to weather, or because demand for workers increases at certain times of the year b. Construction worker, landscaper, holiday cashier (seasonal help)

TYPES OF UNEMPLOYMENT 5.Technological Unemployment a. Basically same as structural unemployment

FULL EMPLOYMENT Does not mean zero unemployment It is the lowest possible unemployment rate with the economy growing and all factors of production being used as efficiently as possible I n the 1960s full employment was believed to be at a 4% unemployment rate

FULL EMPLOYMENT Due to changes in unemployment during the recessions of the 1970s, 80s and 90s, the figure has been increased – now about 5% Still debatable because the unemployment rate has been in the 4.2% - 4.9% range for the last few years.

WHAT KIND OF UNEMPLOYMENT IS IT? 1.Demand for hybrid cars increases and oil industry has to lay off workers 2.Suzy quits her job as a scientist in order to find a job as a teacher 3.The economy is growing and efficient, but Tommy does not have a job 4.Sale of I-pods decreased as the economy takes a down-turn and people have less buying power so Apple lays people off 5.Lifeguard Johnny is currently out of work since no one wants to go to the beach

1.Structural 2.Frictional 3.Full Employment 4.Cyclical 5.Seasonal