1. Unemployment

2. Who gets and keeps a job? Who gets and keeps a job? 1. Those who so invest in their own human capital that a boss can’t do without them 2. Those with the following qualities in order of importance:  dependable  positive attitude  gets along well with others  self-motivated  punctual  consistent  hard working

3. Who is considered unemployed? None are unemployed … to an economist

4. I. Unemployment rate A. Percentage of workforce without work at any given moment B. Statement about the health of an economy C. Is the economy producing enough jobs? D. 2013: Sept: 7.2% If you factor in those who’ve given up looking and those who are underemployed, unemployment stands at about 13.9%

5. To say the economy failed to produce a job for these people Says nothing about the health of the economy

6. D. Who is counted in the unemployment rate? 1. Those who do have a job, BUT: a. worked less than 1 hour in the past week b. work in a family business without pay for less than 15 hours a week 2. Those who technically do NOT have a job, AND: a. looked for work during the past month

7. Question #1 Fred quit work a month ago and has been online filling out resumes and online applications about once a week since. Is Fred unemployed? Fred quit work a month ago and has been online filling out resumes and online applications about once a week since. Is Fred unemployed? Yes Yes

8. Why? Why? Fred does not have a job, AND looked for work during the past month Fred does not have a job, AND looked for work during the past month

9. Question #2 Paul quit his job two months ago, is collecting welfare, and is planning to start job-hunting at the end of next October. Paul quit his job two months ago, is collecting welfare, and is planning to start job-hunting at the end of next October. Is Paul a part of the unemployment rate? Is Paul a part of the unemployment rate? No No

10. Why? Why? Although Paul does not have a job, he has is not trying to find one (ion the last month), so it would be meaningless to suggest the job market has failed him. Although Paul does not have a job, he has is not trying to find one (ion the last month), so it would be meaningless to suggest the job market has failed him.

11. II. Types of Unemployment A. Frictional Unemployment 1. Temporary, short term unemployment 2. Those between jobs 3. First-time job seekers 4. Free market systems cannot provide a job for everyone 5. Some percentage of the population will simply be between jobs 6. For this reason, economists consider an economy with around 5% unemployment rate, fully employed

12. Question #3 What unemployment rate is considered full employment by most economists? What unemployment rate is considered full employment by most economists? About 5% About 5%

13. B. Structural Unemployment 1. Fundamental change in the “structure” of the economy reduces demand for specific skills or for particular products. 2. Due to two factors: an “old” industry or technology being replaced by a new industry or technology an “old” industry or technology being replaced by a new industry or technology a significant change in consumer tastes a significant change in consumer tastes

14. 3. Examples: a. Typewriter replaced by computer b. Horse and buggy Replaced by the car Replaced by the car

15. C. Cyclical Unemployment 1. Caused by swings in the business cycle Expansion Peak Recession Trough (Recovery) Expansion Jobs created during expansionary phase Jobs lost, workers laid off, during recessionary phase Workers rehired when the economy begins to recover again

16. 2. Affects big ticket (or expensive) items most: Cars, boats, homes, large appliances Cars, boats, homes, large appliances In recessions, people keep buying candy bars, but stop buying cars and boats In recessions, people keep buying candy bars, but stop buying cars and boats

17. D. Seasonal Unemployment 1. Job loss due to changes in weather or season Carpenters and fruit harvesters Carpenters and fruit harvesters + = + =

18. E. Technological Unemployment 1. Job loss due to automation (replaced by a machine) 2. Most affects workers with few or underdeveloped skills, education, talent 3. Example: ATM v bank teller +=

21. III. Three Reasons the unemployment rate is not fully reliable: A. Some people lie to statisticians gathering data for the unemployment rate B. Some have jobs, but are underpaid (work 2 jobs to make enough to pay bills) C. Some have part time work, but need a fulltime job

22. Questions 1. To an economist, who is considered among the unemployed 2. At about what rate of unemployment do most economists still consider an economy to be fully employed? 3. What type of unemployment results from a recession? 4. Describe seasonal unemployment 5. Describe technological and structural unemployment, then explain the difference between the two