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Unemployment
The Unemployment Rate = the number unemployed divided by the workforce.
Unemployment Rate
UNEMPLOYED/WORKFORCE
Workforce = 200M, 20M are unemployed, the URate =
10% 150M, 30M are unemployed, URate = _________
100M, 5M are unemployed, URate = __________
Unemployment Rate (URate)
What is acceptable?Up to 6%
Unemployment Rate
What is acceptable?Up to 6%
What is considered “full employment”?About 4.5% URate, no cyclical unemployment, All factors of Production (LLC) in use.
Unemployment Rate
Start with the total population of the US.Subtract those under 16Subtract those in the military
Subtract those “institutionalized”
Employment Statistics
This leaves the “Non Institutional Adult” population.Subtract those retired and receiving retirement funds
Subtract homemakersSubtract full time students over 16
Subtract the “discouraged”
Employment Statistics
This leaves the “Civilian Labor Force”Count full time workers (40 hrs. per
week)Count part time workers (15-39 hrs per
week)Count “unpaid” family business workers
(part of the family)Count those on sick leave, strike, vacationSubtract those looking but not finding,
changing careers, etc.
Employment Statistics
Frictional: Someone is between jobs, about to start one-always present.
Example: Rene just graduated college and is looking for a job.
Example: Fabian just ended his tour in the military and is looking for a job as a Mercenary for the Government.
Types of
Unemployment
Seasonal: due to climate…more prevalent in the Northern climates
Example: Fabiola’s job as an Ice Road Trucker closes during the summer.
Example: Andre’s roofing business closes for the winter.
Types of
Unemployment
Cyclical: results from swings in the business cycle-not present during full employment
Example: Jerry loses his job drawing doodles because demand for drawings is low.
Example: Gabby loses her job because business is too slow at Spanky McGee’s Gift Emporium.
Types of
Unemployment
Structural: due to a change in industry, or a new technology
Example: David’s VCR repair shop closes.
Types of
Unemployment
What are the problems with unemployment figures?
1. hidden unemployment or discouraged worker. This is the worker who is no longer looking for a job so he would not be included with the unemployment number. This worker is still a problem for the economy. We are not using this labor resource efficiently.
©2012, TESCCC
Problems with the unemployment figures
2. under employment- worker’s skills do not match jobs. The worker is overqualified for a job or working at a job below their skills. This could be a person with a master’s degree in English who is working as a waiter. Again, we are not using this labor resource efficiently.
Causes unemployment numbers to be understated©2012, TESCCC
Economic Impact of unemployment is that our standard of living goes down and the economy faces an economic slowdown.
©2012, TESCCC