EMPLOYMENT… In Our Economy. Opportunity Costs How individuals spend their time… At work (income) At play (leisure) Decision: work vs. leisure = individuals.

EMPLOYMENT…

In Our Economy

Opportunity CostsOpportunity Costs• How individuals spend their time…

• At work (income)• At play (leisure)

• Decision:• work vs. leisure = individuals value

more

• How individuals spend their time…• At work (income)• At play (leisure)

• Decision:• work vs. leisure = individuals value

more

Employment / Productivity Living Standards

The employment rate and the rate of productivity determine the level of our living standard.

er + prod = standard of living

What does it mean to be employed or unemployed?

Employed - anyone with a full-time or a part-time job (vacation/sick)

Unemployed - Age 16 or older with no job but is actively looking for a job

Not in the Labor Force - Age 16 or older who are NOT looking for a job

(retired, in school, choose not to work, discouraged workers)

“in the labor force”

Individuals 16 or older either employed or unemployed

“not in the labor force”

Do NOT have job AND

NOT looking for work

(big difference between those who do not have a job and those who are not looking for a job!!)

Unemployment CategoriesJob leavers – Quit their job and immediately begin looking for work

New entrants– Never worked but are searching for work

Reentrants– Previously worked but were out of labor force before beginning their

job search

Job losers– Been fired or have been permanently laid off

Temporary layoffs– Temporarily released but expect to return to work within 6 months

Completed temporary jobs– Began looking for work after their temporary jobs ended

Unemployment Rate

# of unemployed / # in the labor force

(7,000 / 70,000 = .10 or 10%)

QuickTime™ and a decompressor

are needed to see this picture.

3 Types of Unemployment

• FRICTIONAL

• CYCLICAL

• STRUCTURAL

FRICTIONAL• Temp. gap between

jobs in healthy economy

• 1st time entering job force

• Quit job to look for better job (skills, training, etc)

FrictionalFactors vs. Solutions

Factors:

1. Young workers

2. Good unemployment benefits

Solutions:1. Reduce

unemployment benefits

2. Hire mature workers3. Agencies/networks

(head hunters)4. Retrain workers

CYCLICAL• Caused by

recession or downturn

• Less demand for g/s = less demand for workers

• Typically temporary until economy turns healthy again

Cyclical Solutions

• Develop new skills

• Work for less pay

• Later retirement

• Fewer quit their jobs

STRUCTURAL• Lack skills needed

in the labor market

Structural Solutions

• Lack of skills = new job at lower pay

• Focus on new industries/location for job

• Apply for unemployment benefits

• Training programs or retrained

• Early retirement

Frictional vs. StructuralFrictional

1. Supply side event (supply of labor)

2. Short-term problem (30-60 days)

3. Job seekers find new jobs/reenter market

Structural1. Demand side event

(demand for labor)

2. Long-term problem

3. Job seekers have to relocate or acquire new skills

FULL EMPLOYMENT

Does education matter?

Other skills…

Hard skills:

Specific knowledge thru education and training

Soft skills:

Punctuality

Decision making

Working with others

Problem solving