The Unemployment Rate = the number unemployed divided by the workforce.

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