1. Introduction to Unemployment
By: Ben Quick
SSEMA1a,b

2. Measuring Unemployment
The unemployment rate shows the percentage of unemployed people divided by the total number of people in the civilian labor force
The unemployment rate understates the unemployment rate because it does not include “discouraged” workers or people who are working part time because they cannot find full-time work

3. Types of Unemployment
Frictional – Unemployment that occurs when people are between jobs
Structural – Unemployment that occurs when a fundamental change in the economy reduces the demand for workers and their skills
Cyclical – Unemployment that relates to changes in the business cycle

4. The concept of Full Employment
Full employment is the lowest possible employment rate when the economy is growing and all factors of production are being used as efficiently as possible
Full employment is achieved when the rate falls below 4.5%
Current unemployment rate is 4.9%

5. Significance
The unemployment rate is an important indicator that shows the health of the economy
If the unemployment rate is high, then the economy is doing poorly

6. Different measures of Unemployment
U3 – this is the “official” unemployment rate and is currently 4.9%
U6 – includes U3 plus those workers marginally attached (part time but want full time or have stopped looking for work) and is a more comprehensive measure. Currently the U6 rate is 9.4%

7. Questions?