1. Unit 6 Macroeconomics: GDP and Economic Challenges Chapters 13.1 Economics Mr. Biggs

2. Economists look at four basic kinds of unemployment: Frictional Seasonal Structural Cyclical Unemployment

3. Frictional Unemployment Frictional unemployment - Unemployment that occurs when people take time to find a job. For example, finishing school or being selective of available jobs. Seasonal Unemployment Seasonal unemployment - Unemployment that occurs as a result of harvest schedules or vacations, or when industries slow down or shut down for a season. It is a natural part of a healthy economy. For example, migrant or holiday workers.

4. Structural Unemployment Structural unemployment - Unemployment that occurs when workers’ skills do not match the jobs that are available. There are five major causes: 1.New technology can make job skills obsolete. For example, typewriter repairman. 2.New resources can shut down old industries and start new ones. For example, petroleum replaced whale oil as a lubricant and fuel. 3.Changes in consumer demand can leave traditional goods and services without a market. 4.Globalization can cause manufacturing jobs to move overseas where labor is cheaper. 5.Lack of education, or human capital, can leave people lacking minimum skills out of the job market.

5. Cyclical Unemployment Cyclical unemployment - Unemployment that rises during economic downturns and falls when the economy improves. For example, the construction industry. The Social Security Act of 1933 and unemployment insurance were both established to address cyclical unemployment. Measuring Employment The Bureau of Labor Statistics (BLS) polls a sample of 50,000 families which are representative of the entire population. From this representative group, the BLS computes the unemployment rate. Unemployment rate - The percentage of the nation’s labor force that is unemployed.

6. Determining the Unemployment Rate The number of 16 year old or older people who are looking for a job are added together to find the total labor force. Economists then divide the number of unemployed people by the total labor force and multiply by 100. The unemployment rate is only an average for the nation and does not reflect differences from region to region. Full Employment Zero unemployment is not an achievable goal. An unemployment rate of 4% - 6% is considered normal due to frictional, structural, and seasonal unemployment. Full employment - The level of employment reached when there is no cyclical employment.

7. Underemployment Full employment means that nearly everyone who wants a job has a job, but they still might be underemployed. Underemployed - Working at a job for which one is over-qualified, or working part-time when full time work is desired. Discouraged Workers Discouraged worker - A person who wants a job but has given up looking. Discouraged workers do not appear in the Bureau of Labor Statistics because they are not actively looking for a job. Effects of Terrorism Studies estimate that the September 11, 2001 terrorist attacks cost the country 1.5 to 2 million jobs. Many of those jobs were in travel and tourism.

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