unemployment who is unemployed? anyone who is at least 16 years of age and is actively seeking...

Unemployment

Who is unemployedbull Anyone who is at least 16 years of

age and is actively seeking employment

copycopy1999 South-Western College Publishing

Who makes up the Labor Force

bull All non-institutionalized people 16 years of age and older who are either working or actively looking for work


What is the Unemployment rate

bull The number of unemployed people expressed as a percentage of the labor force

bull Unemployment rate = Unemployed Unemployed + Employed

Breakdown of the US Population and the Labor Force


a

Persons under 16Persons in the armed forcesPersons institutionalized

CivilianNoninstitutionalPopulation

Total PopulationNot in Labor Force

Civilian Labor Force

Employed

Unemployed

Survey on UnemploymentSurvey on Unemployment

BLS calls 60000 households every month BLS calls 60000 households every month They ask three questions 1 Are you working1 Are you working If the answer is nono 2 Did you work at all this month-even 1 dayDid you work at all this month-even 1 day You are a member of the LF if ldquoyesrdquoldquoyesrdquo on 1 or 2

3 Did you look for work during the last monthDid you look for work during the last month [agency resume interview] A ldquoyesrdquoldquoyesrdquo counts you aspart of the LFLF A ldquonordquoldquonordquo means you are not countednot countedYou are a ldquodiscouraged workerrdquoldquodiscouraged workerrdquo The labor force consists of the employedemployed and unemployedunemployed

What are some of the problems in measuring unemployment

bull Discouraged worker problembull Part time workersbull Dishonest workers

Who is aDiscouraged Worker

bull A person who drops out of the work force because he or she cannot find a job


Are Discouraged Workers counted in the labor force

No People who have quit looking for work are not counted as part of the labor force


What about part-time workers

bull Part time workers are counted as fully employed

ndash Whether you work one hour a week or 80 the govt counts you as employed

ndash Distorts the labor force picture

bull Example ndash is unemployment in the economy going down because the new jobs being created are part-time low skilled jobs or are they full-time high skill jobs

bull The quality of your economy depends on the answer to that question

Can the unemployment rate increase without anyone losing a

jobbull If more people enter the work force than the

number of new jobs generated the unemployment rate increases


What are different types of unemployment

bull Frictionalbull Structuralbull Cyclicalbull Seasonal


Three Types of UnemploymentThree Types of UnemploymentFrictionalFrictional ndash ldquotemporaryrdquo ldquotransitionalrdquo ldquoshort-termrdquo(ldquobetween jobsrdquo or ldquosearchrdquo unemployment)

Examples1 People who get ldquofiredrdquoldquofiredrdquo or ldquoquitrdquoldquoquitrdquo to look for a better one2 ldquoGraduatesrdquoldquoGraduatesrdquo from high school or college who are looking for a job3 ldquoSeasonalrdquoldquoSeasonalrdquo or weather-dependent jobs such as ldquoldquoagriculturalrdquoagriculturalrdquo ldquoconstructionrdquoldquoconstructionrdquo ldquoretailrdquoldquoretailrdquo or ldquotourismrdquoldquotourismrdquo [lifeguards resort workers Santas amp migrant workers]Frictional unemployment signals that ldquonew jobsrdquoldquonew jobsrdquo are availableand reflects ldquofreedom of choicerdquoldquofreedom of choicerdquo

These are qualified workers ldquotransferablerdquo skillsThese are qualified workers ldquotransferablerdquo skills

22 Structural Structural UnemploymentUnemploymentStructuralStructural ndash ldquotechnologicalrdquoldquotechnologicalrdquo or ldquolong termrdquoldquolong termrdquo There are basic changes in the ldquostructurerdquoldquostructurerdquo of the labor force which make certain ldquoskills obsoleterdquoldquoskills obsoleterdquo

AutomationAutomation may result in job lossesConsumer tasteConsumer taste may make a good ldquoobsoleterdquoThe autoauto reduced the need for carriage makers

Farm machineryFarm machinery reduced the need for farm laborersldquoldquoCreative destructionrdquoCreative destructionrdquo means as jobs are created other jobs are lost Jobs of the future destroy jobs oftoday Frictional and Structural make up the ldquonaturalldquonaturalrate of unemploymentrdquorate of unemploymentrdquo

ldquoldquoThese jobs do not come backrdquoThese jobs do not come backrdquoldquoldquoNon-transferable skillsrdquoNon-transferable skillsrdquo ndash choice is prolonged unemployment or retraining

3 CCyclical yclical UUnemploymentnemployment

CyclicalCyclical ndash ldquoldquoeconomiceconomic downturnsrdquo downturnsrdquo in the business cyclebusiness cycle

ldquoldquoCyclical fluctuationsrdquoCyclical fluctuationsrdquo caused by ldquodeficient ADrdquoldquodeficient ADrdquoldquoldquoDurable goods jobsrdquoDurable goods jobsrdquo are impacted the mostThese cancan be be postponedpostponed because they can be repairedcan be repairedldquoldquoCyclical unemploymentrdquoCyclical unemploymentrdquo is ldquoreal unemploymentrdquoldquoreal unemploymentrdquo

ldquoldquoThese jobs do come backrdquoThese jobs do come backrdquo

Cyclical UnemploymentCyclical UnemploymentldquoldquoThese jobs do come backrdquoThese jobs do come backrdquo

If Arnold S gets laid off producing autos he says

1 Chemical Engineering $565002 ElectricalElectronics Eng $5200933 Computer EngineeringComputer Engineering $51496 $5149644 Computer ScienceComputer Science $51292 $512925 Mechanical Engineering $510466 EconomicsEconomicsFinance $45000$450007 Accounting $445648 M8 Mgmtgmt I Info nfo SSysysBBus us DDataata P Processingrocessing $43732$437329 Civil Engineering9 Civil Engineering $43462 $4346210 Management Info Sys $4000011 Teaching11 Teaching $40600 $4060012 B12 Business usiness AAdmindminMMgmtgmt $39448 $3944813 Nursing $3877514 M14 MarketingarketingMMarketing arketing MMgmtgmt $36674 $3667415 Communications15 Communications $28000 $2800016 Psychology16 Psychology $27000 $27000

Top Paying College Majors for Top Paying College Majors for 20062006

EconEconEconEcon

Seasonal

Is it possible to have a 0 unemployment rate

bull Not likely At any one time the economy could not absorb ALL the people who wanted a job There is always some unemployment

ndash The best we could hope for is that there be no cyclical unemployment from the ups and downs of the economy

ndash There will always be some level of Frictional and Structural Unemployment

bull This is called The Natural Rate of Unemployment

GraphmdashNatural Rate of Unemployment

What is the natural rate of unemployment

bull The sum of frictional and structural unemployment

What is consideredFull Employment

bull An employment level at which the actual rate of unemployment is equal to the natural rate of unemploymentndash If the economy can get to this

definition of Full-employment it is doing the best that it can


What is considered to be the natural rate of unemployment

bull The natural rate varies most estimates are from 4-6


Current Unemployment Rate

bull The current unemployment rate in the US is about 80 Is this good bad or just about right




Frequency Annual Quarterly

Time2004 2005 2006 2006 2007

Q3-2006 Q4-2006 Q1-2007

Country

Australia i 55 51 49 48 46 45

Austria i 48 52 48 47 45 45

Belgium i 84 84 82 81 79 77

Canada i 72 68 63 64 62 61

Czech Republic i 83 79 72 71 66 63

Denmark i 55 48 39 37 36 34

Finland i 89 84 77 78 74 69

France i 96 97 94 93 91 88

Germany i 95 94 84 84 79 72

Greece i 105 99 89 87 86

Hungary i 61 72 75 76 77 8

Ireland i 45 43 44 44 42 4

Italy i 8 77 68 66 65

Japan i 47 44 41 41 41 4

Korea i 37 37 35 34 34 32

Luxembourg i 51 45 48 47 48 49

Netherlands i 46 47 39 39 37 35

New Zealand i 39 37 38 38 37 38

Norway i 44 46 35 33 29 27

Poland i 19 177 138 134 126 118

Portugal i 67 76 77 76 8 81

Slovak Republic i 182 162 134 131 124 111

Spain i 106 92 85 83 84 82

Sweden i 63 73 7 69 65 65

Switzerland i 44 45 4 39 38 37

United Kingdomi 47 48 53 54 54

Why do some other major economies have persistently higher unemployment rates than the US

bull Government policies are a major culprit

Unemployment Theories - Costs of Unemployment - Who paysPerhaps the main cost of unemployment is a personal one to those who are unemployed

However if they suffer then the whole economy suffers Individuals may become dispirited by unemployment they may lose their self-esteem and confidence This may affect their

motivation to work The longer they are unemployed the more they may lose their skills and this has to be bad for the economy as well On top of that these problems (and financial ones)

often lead to the unemployed being less healthy and then the NHS picks up the bill The whole economy suffers from people being unemployed

As well as these microeconomic effects there will also be macro effects These will include

Loss of output to the economy - the unemployed could be producing goods and services and if they arent then GDP is lower than it could be

Loss of tax revenue - unemployed people arent earning and they therefore arent paying tax The government has lost out

Increase in government expenditure - the government has to pay out benefits to support the unemployed Along with the loss of tax this is a double whammy

Loss of profits - with higher employment firms are likely to do better and make better profits If they make less profit because of unemployment they may have less funds to invest

The answer then is - we all pay

PowerPoint Presentation

Who is unemployed



Slide 5


Survey on Unemployment

Slide 8


Who is a Discouraged Worker



Can the unemployment rate increase without anyone losing a job

Slide 14


Three Types of Unemployment

2 Structural Unemployment

3 Cyclical Unemployment

Cyclical Unemployment

Top Paying College Majors for 2006

Slide 21

Slide 22




What is considered Full Employment

Slide 27



Slide 30

Slide 31


Slide 33

Who is unemployedbull Anyone who is at least 16 years of

age and is actively seeking employment










a





Employed

Unemployed








































EconEconEconEcon

Seasonal






















Time2004 2005 2006 2006 2007

Q3-2006 Q4-2006 Q1-2007

Country

Australia i 55 51 49 48 46 45

Austria i 48 52 48 47 45 45

Belgium i 84 84 82 81 79 77

Canada i 72 68 63 64 62 61


Denmark i 55 48 39 37 36 34

Finland i 89 84 77 78 74 69

France i 96 97 94 93 91 88

Germany i 95 94 84 84 79 72

Greece i 105 99 89 87 86

Hungary i 61 72 75 76 77 8

Ireland i 45 43 44 44 42 4

Italy i 8 77 68 66 65

Japan i 47 44 41 41 41 4

Korea i 37 37 35 34 34 32

Luxembourg i 51 45 48 47 48 49

Netherlands i 46 47 39 39 37 35

New Zealand i 39 37 38 38 37 38

Norway i 44 46 35 33 29 27

Poland i 19 177 138 134 126 118

Portugal i 67 76 77 76 8 81


Spain i 106 92 85 83 84 82

Sweden i 63 73 7 69 65 65
















Who is unemployed



Slide 5



Slide 8






Slide 14







Slide 21

Slide 22





Slide 27



Slide 30

Slide 31


Slide 33









a





Employed

Unemployed








































EconEconEconEcon

Seasonal






















Time2004 2005 2006 2006 2007

Q3-2006 Q4-2006 Q1-2007

Country

Australia i 55 51 49 48 46 45

Austria i 48 52 48 47 45 45

Belgium i 84 84 82 81 79 77

Canada i 72 68 63 64 62 61


Denmark i 55 48 39 37 36 34

Finland i 89 84 77 78 74 69

France i 96 97 94 93 91 88

Germany i 95 94 84 84 79 72

Greece i 105 99 89 87 86

Hungary i 61 72 75 76 77 8

Ireland i 45 43 44 44 42 4

Italy i 8 77 68 66 65

Japan i 47 44 41 41 41 4

Korea i 37 37 35 34 34 32

Luxembourg i 51 45 48 47 48 49

Netherlands i 46 47 39 39 37 35

New Zealand i 39 37 38 38 37 38

Norway i 44 46 35 33 29 27

Poland i 19 177 138 134 126 118

Portugal i 67 76 77 76 8 81


Spain i 106 92 85 83 84 82

Sweden i 63 73 7 69 65 65
















Who is unemployed



Slide 5



Slide 8






Slide 14







Slide 21

Slide 22





Slide 27



Slide 30

Slide 31


Slide 33








































EconEconEconEcon

Seasonal






















Time2004 2005 2006 2006 2007

Q3-2006 Q4-2006 Q1-2007

Country

Australia i 55 51 49 48 46 45

Austria i 48 52 48 47 45 45

Belgium i 84 84 82 81 79 77

Canada i 72 68 63 64 62 61


Denmark i 55 48 39 37 36 34

Finland i 89 84 77 78 74 69

France i 96 97 94 93 91 88

Germany i 95 94 84 84 79 72

Greece i 105 99 89 87 86

Hungary i 61 72 75 76 77 8

Ireland i 45 43 44 44 42 4

Italy i 8 77 68 66 65

Japan i 47 44 41 41 41 4

Korea i 37 37 35 34 34 32

Luxembourg i 51 45 48 47 48 49

Netherlands i 46 47 39 39 37 35

New Zealand i 39 37 38 38 37 38

Norway i 44 46 35 33 29 27

Poland i 19 177 138 134 126 118

Portugal i 67 76 77 76 8 81


Spain i 106 92 85 83 84 82

Sweden i 63 73 7 69 65 65
















Who is unemployed



Slide 5



Slide 8






Slide 14







Slide 21

Slide 22





Slide 27



Slide 30

Slide 31


Slide 33

Seasonal






















Time2004 2005 2006 2006 2007

Q3-2006 Q4-2006 Q1-2007

Country

Australia i 55 51 49 48 46 45

Austria i 48 52 48 47 45 45

Belgium i 84 84 82 81 79 77

Canada i 72 68 63 64 62 61


Denmark i 55 48 39 37 36 34

Finland i 89 84 77 78 74 69

France i 96 97 94 93 91 88

Germany i 95 94 84 84 79 72

Greece i 105 99 89 87 86

Hungary i 61 72 75 76 77 8

Ireland i 45 43 44 44 42 4

Italy i 8 77 68 66 65

Japan i 47 44 41 41 41 4

Korea i 37 37 35 34 34 32

Luxembourg i 51 45 48 47 48 49

Netherlands i 46 47 39 39 37 35

New Zealand i 39 37 38 38 37 38

Norway i 44 46 35 33 29 27

Poland i 19 177 138 134 126 118

Portugal i 67 76 77 76 8 81


Spain i 106 92 85 83 84 82

Sweden i 63 73 7 69 65 65
















Who is unemployed



Slide 5



Slide 8






Slide 14







Slide 21

Slide 22





Slide 27



Slide 30

Slide 31


Slide 33






















Time2004 2005 2006 2006 2007

Q3-2006 Q4-2006 Q1-2007

Country

Australia i 55 51 49 48 46 45

Austria i 48 52 48 47 45 45

Belgium i 84 84 82 81 79 77

Canada i 72 68 63 64 62 61


Denmark i 55 48 39 37 36 34

Finland i 89 84 77 78 74 69

France i 96 97 94 93 91 88

Germany i 95 94 84 84 79 72

Greece i 105 99 89 87 86

Hungary i 61 72 75 76 77 8

Ireland i 45 43 44 44 42 4

Italy i 8 77 68 66 65

Japan i 47 44 41 41 41 4

Korea i 37 37 35 34 34 32

Luxembourg i 51 45 48 47 48 49

Netherlands i 46 47 39 39 37 35

New Zealand i 39 37 38 38 37 38

Norway i 44 46 35 33 29 27

Poland i 19 177 138 134 126 118

Portugal i 67 76 77 76 8 81


Spain i 106 92 85 83 84 82

Sweden i 63 73 7 69 65 65
















Who is unemployed



Slide 5



Slide 8






Slide 14







Slide 21

Slide 22





Slide 27



Slide 30

Slide 31


Slide 33














Who is unemployed



Slide 5



Slide 8






Slide 14







Slide 21

Slide 22





Slide 27



Slide 30

Slide 31


Slide 33

unemployment who is unemployed? anyone who is at least 16 years of age and is actively seeking...

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