1. Unemployment

2. Today’s Objective  After today’s lesson, students will be able to…  Explain the types of unemployment and calculate the unemployment rate.  Essential Skill:  Gather and organize information and data

3. What’s the Price?

9. Nominal GDP  A gross domestic product (GDP) figure that has not been adjusted for inflation.  Also known as "current dollar GDP"

10. Real GDP  An inflation-adjusted measure that reflects the value of all goods and services produced in a given year, expressed in base-year prices.  Often referred to as "constant-price," "inflation- corrected" GDP or "constant dollar GDP".

11. Complete two worksheet on GDP  We will go over and talk through these examples  Calculating GDP using the expenditure method and calculating nominal and real GDP are skills that you will have to know how to do  Vocabulary sheet is a study sheet for you

12. Unemployment

13. Today’s Objective  After today’s lesson, students will be able to…  Explain the types of unemployment and calculate the unemployment rate.  Essential Skill:  Gather and organize information and data

14. Unemployment: What you need to know  Civilian and Non-institutionalized Adult Population:  Everyone 16 years old or older and who is not in the military, not in jail or prison, not living permanently in nursing homes, and not in other “institutions”

15. Unemployment: What You Need to Know  Employed (E):  The number of adult civilians who are working and on a payroll of some type  Unemployed (U):  The number of adult civilians who are not working but are actively seeking work

16. Unemployment: What you need to know  Labor Force :  The number of people 16 years old and above who are either employed or actively seeking employment  Excludes people serving in the military, retirees, anyone that is “institutionalized ”  So…  LF = E + U

17. Who is/is not?  Retired grandpa?  Stay at home mom?  College student?  Thief serving time in prison?  Cousin in the Army?  YOU?

18. Calculating Unemployment Rate Number of unemployed persons Labor Force = X100 Try on your own… Labor force has 154,082,000 people Unemployed number 15,100,000 people What is our unemployment rate? *Is that measure accurate?

19. *Accuracy of Unemployment Rate  Underemployed—have a job but would like to work more  Discouraged Worker—too discouraged to keep looking for work *Both are not included in the unemployment rate because they do not meet the qualifications…

20. Frictional Unemployment  Frictional unemployment due to people moving between jobs: Includes people experiencing short spells of unemployment  Includes new and returning entrants into the labor market  Imperfect information about available job opportunities can lengthen the period of someone’s job search

21. Seasonal Unemployment  Regular seasonal changes in employment / labor demand  Affects certain industries more than others  Catering and leisure  Construction  Retailing  Tourism  Agriculture

22. Structural Unemployment  Arises from the mismatch of skills and job opportunities as the pattern of labor demand in the economy changes  Occupational immobility of labor  Often involves long-term unemployment  Prevalent in regions where industries go into long-term decline  Good examples include industries such as mining, engineering and textiles

23. Cyclical unemployment  There is a cyclical relationship between demand, output, employment and unemployment  Caused by a fall in demand leading to a loss of real national output and employment  A slowdown can lead to businesses laying off workers because they lack confidence that demand will recover

24. Natural Rate of Unemployment  The unemployment rate in the absence of cyclical unemployment around which the actual unemployment rate fluctuates

25. Full Employment  The level of employment when there is no cyclical unemployment.  Due to the existence of other types of unemployment, the achievement of full employment does not mean that every worker is employed.

26. Activity  You will play the role on your card  Move around the classroom and interview your classmates to see if they are part of the Labor Force or if they are part of the Unemployment Rate  Organize into 5 groups and stay there so that we can calculate our unemployment rate 1. Structurally Unemployed 2. Frictionally Unemployed 3. Cyclically Unemployed 4. Employed 5. Not in the work force

27. Economic and Social Costs of Unemployment  The private costs for the unemployed  Loss of income  Fall in real living standards  Increased health risks  Stress, Reduction in quality of diet, Social exclusion because of loss of work and income  Loss of marketable skills (human capital) and motivation  The longer the duration of unemployment, the lower the chances of finding fresh employment - the unemployed become less attractive to potential employers

28. Consequences of Unemployment  Economic Consequences for Businesses  Negative consequences  Fall in demand for goods and services  Fall in demand for businesses further down the supply chain  Consider the negative multiplier effects from the closure of a major employer in a town or city  Some positive consequences  Bigger pool of surplus labor is available – but still a problem if there is plenty of structural unemployment  Less pressure to pay higher wages  Less risk of industrial / strike action – fear of job losses – leading to reduced trade union power

29. Figure 41.3: P. 495

30. Practice  Start working on the Unemployment worksheet and packet

31. History of Unemployment  http://www.washingtonpost.com/wp-srv/special/business/us- unemployment-rate-history/ http://www.washingtonpost.com/wp-srv/special/business/us- unemployment-rate-history/