1. Employment and Unemployment

2. Total Population age 16 and over Employed Employed Employees Self-employed Unemployed Unemployed New entrants Re-entrants Lost last job Quit last job Laid off Not in Labor Force Not in Labor Force Armed forces Household workers Students Retirees Disabled persons Institutionalized Discouraged workers Civilian labor force

3. UNEMPLOYMENT Measurement of Unemployment, Dec 2011 Employed Not in labor force Under 16 and/or institutionalizedTotalPopulation Jan 20 312,896,971 Civilian Labor force153,877,000 71,808,000 87,212,000 Unemployed 13,086,000 140,791,000 Unemployment Rate 8.5% Labor force participation rate 64%

4. If the total population is million, and the civilian labor force includes 175,926,000 with jobs & 9,849,000 unemployed but looking for jobs, then the employment rate would be ___%. If the total population is 312 million, and the civilian labor force includes 175,926,000 with jobs & 9,849,000 unemployed but looking for jobs, then the employment rate would be ___%. Unemployment Rate = Unemployed Labor Force 9,849,000 / 175,926,000 x 100 = 5.5% 13,086,000 153,877,000X100 = 8.5% X 100

5. 2.5million persons who were marginally attached to the labor force in Dec 2011, about unchanged from a year earlier. 2.5million persons who were marginally attached to the labor force in Dec 2011, about unchanged from a year earlier. wanted and were available to work and had looked for a job sometime in the prior 12 months. wanted and were available to work and had looked for a job sometime in the prior 12 months. not counted as unemployed—they did not actively search for work in the 4 weeks preceding the survey. not counted as unemployed—they did not actively search for work in the 4 weeks preceding the survey. Discouraged workers, a subset of the marginally attached, were not currently looking for work specifically because they believed no jobs were available for them. Discouraged workers, a subset of the marginally attached, were not currently looking for work specifically because they believed no jobs were available for them. The number of discouraged workers, at 945,0000 in December, - 373,0000 as a year earlier The number of discouraged workers, at 945,0000 in December, - 373,0000 as a year earlier The other 1.6 million marginally attached had not searched for work for reasons such as school or family responsibilities. The other 1.6 million marginally attached had not searched for work for reasons such as school or family responsibilities. Persons Not in the Labor Force

6. Three Types of Unemployment These are qualified workers “transferable” skills. Examples: 1.People who get “fired” or “quit” to look for a better one. 2. “Graduates” from high school or college who are looking for a job. 3. “Seasonal” or weather-dependent jobs such as: “agricultural”, “construction”, “retail”, or “tourism.” [lifeguards, resort workers, & migrant workers.] “agricultural”, “construction”, “retail”, or “tourism.” [lifeguards, resort workers, & migrant workers.] Frictional Frictional – “temporary”, “transitional”, “short-term.” (“between jobs” or “search” unemployment)

7. Structural“technological”“long term”. “structure” “skills obsolete”. Structural – “technological” or “long term”. basic changes in the “structure” of the labor force which make certain “skills obsolete”. Automation Automation may result in job losses. Consumer taste may make a good “obsolete”. – The auto reduced the need for carriage makers. – Farm machinery reduced the need for farm laborers. Creative destruction Creative destruction means as jobs are created, other jobs are lost. Jobs of the future destroy jobs of today. – These jobs do not come back. – Non-transferable skills” – choice is prolonged unemployment or retraining. Frictional and Structural make up the “natural rate of unemployment”.

8. “These jobs do come back.” √ Cyclical fluctuations” caused by deficient demand for goods and services √ “Durable goods” jobs are impacted the most. Purchase of these durables can be postponed because they can be repaired. Cyclical – “economic downturns” in the business cycle. “Cyclical unemployment” is “real unemployment”.

9. Survey on Unemployment BLS calls 60,000 households every month. They ask three questions: 1.Are you working? If the answer is no, 2. Did you work at all this month-even 1 day? You are a member of the LF if “yes” on 1 or 2. 3. Did you look for work during the last month? [agency, resume, interview] A “yes” counts you as part of the LF. A “no” means you are not counted. You are a “discouraged worker.” The labor force consists of the employed and unemployed.

10. Costs of unemployment  Full employment is less than 100% because the economy is dynamic—frictional and structural unemployment are often inevitable.  The Full employment rate of unemployment or the Natural Rate of Unemployment (NRU) is present when the economy is producing its potential output.  Anything past the NRU, prevents us from reaching our Potential Output.

11. Full Employment NRU is present when the number of job seekers equals the number of job vacancies.NRU is present when the number of job seekers equals the number of job vacancies. When labor markets are in balance, there is lag time.When labor markets are in balance, there is lag time. Workers seeking jobs and those retraining are the cause of the lag.Workers seeking jobs and those retraining are the cause of the lag. The Natural Rate of Unemployment exists when the cyclical unemployment is zero.

12. Economists in the 1980’s thought the NRU was 6%. Today, the figure is 4 to 5%. Why? Economists in the 1980’s thought the NRU was 6%. Today, the figure is 4 to 5%. Why? √ Fewer workers available as baby boomers age. √ Workers find jobs more quickly—the internet is a source of information. √ Changes in the welfare system put more people in the labor force. √ Doubling of US prison population removes relatively high unemployment individuals from the labor force. Full Employment

13. GDP Gap and Okun’s Law GDP Gap= Actual GDP – Potential GDP Every 1 percentage point in which the unemployment rate exceeds the NRU, a GDP Gap of about 2% occurs. If NRU is 4.5% and our current UR is 9.4% and our current GDP is $14.7 trillion our potential current loss of potential GDP is $1.470 trillion (5% x 2 x $14.7 trillion)

14. Unemployment Actual and Potential GDP and the Unemployment Rate 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 The GDP Gap 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 GDP (billions of 1996 dollars) 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 The Unemployment Rate 10 8 6 4 2 0 Unemployment (percent of civilian Labor force) Source: Congressional Budget Office & Bureau of Economic Analysis GDP gap (positive) GDP gap (negative) Potential GDP Actual GDP

15.  Occupation  Age  Race and Ethnicity  Gender  Education  Duration The Jobless Rate for People Like You - Interactive Graphic - NYTimes.com Unequal Burdens

16. In 1960, 60% of jobs could be held by unskilled or semi-skilled workers. Today, it is only 15%. JOB FACTOID!

17. Hottest Jobs These jobs will have the most net gains through 2018 (in 1000’s) 1.Biomedical engineers 2.Network systems and Data communications analysts 3.Home Health Aides 4.Financial Examiners 5.Medical Scientists 6.Physician assistants 7.Biochemists 8.Athletic trainers 9.Physical therapist aides 10.Dental Hygienists

18. 1. Petroleum Engineering $93,000 2. Aerospace Engineering $59,400 3. Chemical Engineering $64,800 4. Electrical Engineering $60,800 5. Nuclear Engineering $63,900 6. Applied Mathematics$56,400 7. Biomedical Engineering $54,800 8. Physics $50,700 9. Computer Engineering $61,200 10. Economics $48,800 11. Computer Science$56,200 12. Civil Engineering $53,500 13. Statistics $50,000 14. Finance $47,500 15. Software Engineering $56,700 Top Starting Pay College Majors for 2010

19. Unemployment Source: Bureau of Labor Statistics U.S. Germany Italy Japan France 199520002005 Unemployment Rate (percent) Unemployment Rates in Five Industrial Nations, 1995-2005 GLOBAL PERSPECTIVE