1. Unemployment

2. Measuring Unemployment
Civilian Labor Force
The sum of all persons age 16 and above who are either employed of actively seeking employment
The measure excludes members of the military
People in jail, mental health facilities, or disabled are also not counted in the numbers

3. Measuring Unemployment
Unemployed Persons
The process of determining who is unemployed is complicated
The Census Bureau figures out how many people are employed versus how many people are actively looking for a job
“Working” means that a person has invested at least 1 hour into a job within a given week

4. Measuring Unemployment
Unemployment Rate
Number of unemployed individuals divided by the total number of persons in the civilian labor force
As of December 2017, the unemployment rate was at 4.1%, nearing a 20 year low

5. Measuring Unemployment

6. Measuring Unemployment
What the Unemployment Rate does not include:
Underemployment – People who are not working 40 hours a week
People who leave the workforce – When people become frustrated and stop looking for a job, they are no longer counted in the numbers

7. Sources of Unemployment
Frictional Unemployment
Workers that are between jobs for a short period of time
As long as workers are free to change jobs, some people will be unemployed
Structural Unemployment
Created by a fundamental change to the economy
Outsourcing is a key reason why many manufacturing jobs have been lost

8. Sources of Unemployment
Technological Unemployment
Occurs when workers are replaced by machines or automated systems that make skills obsolete
Cyclical Unemployment
Tied to the Business Cycle
When the economy enters periods of recession, many companies decrease the size of their workforce

9. Sources of Unemployment
Seasonal Unemployment
Unemployment that occurs as a result of seasonal changes
Snow plow drivers are generally useless in the summer months, so employment dips
Retail sales employees are used less following the holiday rush and a percentage become unemployed

10. Cost of Instability GDP Gap Misery Index Uncertainty
Difference between Real GDP and Potential GDP
Misery Index
Sum of the Inflation rate and Unemployment rate
Uncertainty
When the economy is unstable, it creates a large amount of uncertainty, which hold back investment and growth