1. Unemployment

2. Define Unemployment The number of people who are actively looking for work but are not currently employed

3. Calculate Unemployment

4. Tracking Unemployment The Bureau of Labor Statistics tracks unemployment data (as well as price levels) Current Population Survey  Uses 60,000 Households  Specifics not discussed in class for interested students may be found here: http://www.bls.gov/cps/cps_htgm.htm

5. 5 The Census Bureau’s Household Survey Employed Worked one or more hours for pay? Unemployed Temporary layoff? Searched for work? Yes Not in Labor Force No How BLS Measures Employment Status

6. 6 The Census Bureau’s Household Survey Employed144.0 Million Not in Labor Force Under 16 Military or Institutionalized Unemployed 7.0 Million 77.4 Million 71.4 Million Civilian Noninstitutional Population Labor Force U.S. Population May 2006 Employment Status of the U.S. Population—May 2006

7. Types of Unemployment Frictional  Time “between” jobs Structural  Wrong skill-set - or - more people seeking jobs than there are jobs available Seasonal  Based on the season Cyclical  Recession

8. Sources of Structural Unemployment & Wage Rigidity Minimum Wages  Government price control Labor Unions  Pushes for higher wages and restricts job openings Efficiency Wages  Higher pay for more productivity Public Policy  Unemployment Insurance – subsidizing unemployment

9. Types of Unemployment Natural Rate of Unemployment (A.K.A. – Full Employment)  includes Frictional + Structural  around 4.5% to 5.0% Actual Rate of Unemployment  includes Natural + Cyclical

10. Biases In Unemployment Discouraged Workers  Those that have given up Marginally Attached Workers  Are not currently looking Underemployment  Work part-time but would like full time The BLS attempts to track and correct these issues. Data series may be found at: http://www.bls.gov/cps/lfcharacteristics.htm#altmeasures