1 Chapter 13 Employment © 2003 South-Western College Publishing

2 Size and Composition of the Labor Force  Total labor force  all persons 16 years old or older, except persons in prisons or mental institutions

3 Size and Composition of the Labor Force  Civilian labor force  all persons in the total labor force except members of the resident armed forces  Labor force participation rate  The civilian labor force as a % of the civilian non- institutionalized population

4 Employed & Unemployed Labor Force  Employed labor force  All employed workers  Includes persons who did not work at all during the census week for various reasons  Unemployed labor force  All persons in the labor force who are not currently working but are seeking work

5 Trends in the Labor Force & Employment  Older workers (65 years old and over)  Decreased as a percentage of civilian labor force  Female workers  Number and percentage have increased  Skilled and unskilled workers  Percentage of unskilled workers in U.S. labor force has decreased  Service-oriented jobs  Increase in number and percentage of civilian work force

6 Trends in the Labor Force & Employment  Agricultural employment  Definite move away from agricultural occupations  Organized workers  Union membership has decreased as a percentage of the civilian labor force  Diversity  Increases in the number of Hispanics, blacks, Asians

7 Types of Unemployment  Frictional  Arises from normal operation of the labor market  Job terminations by employees, discharges, or relocation  Cyclical  Arises from less than full use of productive capacity in an economy due to recession

8 Types of Unemployment  Structural  Caused by imbalance between worker skills and skills demanded by the labor market  Some argue that unemployment may also be consequence of subsidies provided by public and private socioeconomic programs  Unemployment compensation  Supplementary unemployment benefits

9 Full Employment  Employment Act of 1946  Meaning of full employment  full utilization of natural resources, technology and science, farms, factories, knowledge, and trade skills  Full employment unemployment rate  rate of unemployment that can be expected from normal frictional unemployment in an otherwise fully employed labor force

10 Unemployment  Unemployment  workers in the labor force are not currently working at all  Underemployment  workers in the labor force are working, but not to full capacity  Natural rate of unemployment  rate of unemployment that would occur if the economy was producing at its full potential  Humphrey-Hawkins Act

11 International Comparisons of Unemployment Rates Countries Unemployment Rate for April U.S. Canada France Germany Great Italy Japan Britain

12 Employment Effects of Minimum Wage Q d Q e Q s WeWe WmWm S D Number Employed Wage Layoffs Unemployed Entrants Minimum wage leads to a gap between the quantity of labor demanded and the quantity supplied at that wage

13 Employment Effects of Minimum Wage  Increases do benefit workers who keep their jobs  However, the net effect is a loss of jobs  Studies have suggested that the latest increase in the minimum wage has eliminated between 130,000 and 400,000 jobs  Not all agree that a decline in teenage employment results from increases in the minimum wage