1. Key Economic Indicators: Unemployment Economics 2015 Breedlove

2. Measuring Economic Growth? Unemployment Inflation an increase in the average level of prices, not a change in any specific price. Gross Domestic Product The sum total of the value of all goods and services produced within a country in a given year.

3. Quick Write: 1.Why is some level of unemployment necessary for a market economy to grow? 2.According to the definition used by the U.S. government, are you considered a member of the labor force? Why or why not?

4. Civilian Labor Force – an individual, 16 years of age who are currently working for pay OR actively looking for a paying job! Unemployment Rate - % of people in labor force without jobs and actively looking for employment.

5. Total Population age 16 and over (260 million) Not in Labor Force Not in Labor Force Armed forces Homemakers Students Retirees Other Discouraged workers Civilian labor force Employed Employees Self-employed Unemployed New entrants Re-entrants Lost last job Quit last job Laid off 142 million 13 million 110 million

6. Types of Unemployment Seasonal Unemployment – happens when seasonal variations produce fluctuations in job market –Agriculture, housing, summer, holiday Frictional Unemployment – happens when workers are between jobs, but able to employed quickly. –switching jobs, new job seekers, recent grads

7. Structural Unemployment – when QD of a labor force is less than the QS of laborers –Downsized, technology innovations, improved efficiency Cyclical Unemployment – when an economy has inadequate Aggregate Demand! –Recession: when nation’s total output of g&s is down for 2 quarters –Depression: when nation’s total output of g&s is down for an extended period of time Natural Rate of Unemployment – the total frictional AND structural unemployed. –Some unemployment is good AND necessary! –“full employment”

8. Does Government Overstate Unemployment? BLS never sure reporting is accurate Respondent may be engaged in illegal economic activity Respondents may falsely report they are actively looking for work –Unemployment benefits –Welfare benefits

9. How is Unemployment Understated? Hidden Unemployment – when an individual is unemployed & wants a job, BUT, is not actively looking! –Discouraged workers: no jobs available or nothing of interest/background so worker stops “looking” for job –Underemployed workers: when pay, hours or responsibility is less than training or experience would warrant

10. Income Effects of Unemployment Unemployed must still pay living expenses when out of work Savings usually depleted or destroyed Lower living standards for unemployed Reduced revenue for federal, state & local gov’t BUT increased expenses for unemployment payouts and welfare Each 1% increase in UE = $30billion loss

11. Real Output Effect of Unemployment Rise in unemployment equals decline in national production! For each 1% increase in UE = $100 billion loss in national output G/S not produced are gone FOREVER! Reduced future growth of economy Reduced future standard of living for ALL!

12. Social Effects of Unemployment Increased depression, health issues, family tension! Suicides, divorce abuse rates increase For each 1% increase in UE: –1.9% jump in stress-related deaths –4.1% jump in suicides –5.7% jump in homicides –4% jump in prison commitments Spouses & children suffer, too!