1. Chapter 14.2
Unemployment
Pgs

2. Measuring Unemployment
The Unemployment Rate
How do we know how many people are unemployed?
What does it mean to be unemployed?
People who can work, want to work & aren’t working.
We call them – thousands of them
The unemployment rate
% of the workforce out of work
This is roughly 140,000 per .1%
That’s a 1% change in the UR being roughly 2x the population of a city like Detroit

3. Cont. Limitations of the Unemployment Rate
Doesn’t count people who have “given up”
This could be over 1 million people
Part time jobs = employed
How’s a GM worker who’s laid off going to make it on a McDonald’s paycheck?

4. Kinds of Unemployment Frictional Unemployment Structural Unemployment
This is the “good” kind
People “between jobs”
New entrants into the workforce
You guys
Structural Unemployment
This is the “bad” kind
A fundamental change in the economy
New technology, consumer tastes, changes in business operations
Workers no longer have desired skills

5. Cont. Cyclical Unemployment
People who lose their jobs from the ups & downs of the economy
(The next 2 don’t really exist according to the Michigan Department of Education, as you’ll see these could never happen in Michigan.)
Seasonal Unemployment
People who are out of work due to bad weather
Technological Unemployment
When new machines replace human workers, robots on an assembly line

6. The Concept of Full Employment
Can everyone really be employed?
Think about scarcity
If we run out of workers we’ll start fighting over people
People will quit one job for a higher paying one
Wouldn’t others enter trying to cash in?
Remember the people who “gave up”?
What is a realistic unemployment rate?
Most economists say 4% or less

7. Cont. What is the Unemployment Rate today?
The US: 8.8% as of April 1st
Michigan: 10.3% as of February
Genesee County:11.8% as of February
And Michigan compared to others?
We’re Number 5! We’re Number 5!
As in the 5th highest
Not counting Puerto Rico