1. Unemployment

2. Official Definition: –The total number of adults who are willing and able to work; –Who are not working; –And who have made a specific effort to find work

3. Unemployment Adults are defined as anyone 16 and over. Actively seeking work means: –Will have a job in 30 days. –Waiting to be recalled. –Have looked for work in the past 4 weeks.

4. Unemployment Rate Defined as: NUMBER UNEMPLOYED TOTAL CIVILIAN LABOR FORCE

5. How to Obtain the Unemployment Rate

6. How to Obtain Unemployment Rate TOTAL POPULATION Minus INSTITUTIONALIZED POPULATION Equals NON-INSTITUTIONALIZED POPULATION

7. How to Obtain Unemployment Rate NON-INSTITUTIONALIZED POPULATION Minus NOT IN THE LABOR FORCE Equals LABOR FORCE

8. How to Obtain Unemployment Rate LABOR FORCE Minus ARMED FORCES Equals TOTAL CIVILIAN LABOR FORCE

9. How to Obtain Unemployment Rate TOTAL CIVILIAN LABOR FORCE Minus EMPLOYED Equals UNEMPLOYED

10. Categories for Finding the Unemployment Rate A.TOTAL POPULATION –The total population of the United States

11. Categories for Finding the Unemployment Rate B. INSTITUTIONALIZED POPULATION –Everyone under 16 –Everyone in jails –Everyone in insane asylums –Everyone in nursing homes

12. Categories for Finding the Unemployment Rate C. NOT IN LABOR FORCE –Retirees not working –People unable to work –Full time students –Homemakers

13. Categories for Finding the Unemployment Rate D. ARMED FORCES –All active duty military personnel.

14. Problems with the Unemployment Rate

15. Numerous problems with how we count leads to a serious undercount of the true number of unemployed.

16. Problems with the Unemployment Rate A. DISCOURAGED WORKERS –People without jobs, who have given up looking for work. –Usually recognized as the most serious problem

17. Problems with the Unemployment Rate A. DISCOURAGED WORKERS –Officially, they cease to be counted as unemployed. –Instead, they are dropped out of the labor force.

18. Problems with the Unemployment Rate A. DISCOURAGED WORKERS –Depending on the state of the economy, they can be as many as 2% of the labor force.

19. Problems with the Unemployment Rate A. DISCOURAGED WORKERS –Depending on the state of the economy, they can be as many as 2% of the labor force.

20. Problems with the Unemployment Rate The number of discouraged workers increases: –The longer a recession lasts. –The more severe a recession is.

21. Problems with the Unemployment Rate B. OLDER MALE WORKERS: –The percentage of men over 55 who work, has fallen in the last 25 years.

22. Problems with the Unemployment Rate B. OLDER MALE WORKERS: –Some is due to voluntary early retirement. –Some is due to forced, early retirement. –Some is due to layoffs. We don’t really know how much of each!

23. Problems with the Unemployment Rate C. PART TIME WORKERS –Many part time workers only want part time work. –But for many others, part time is not a voluntary choice.

24. Problems with the Unemployment Rate C. PART TIME WORKERS –Some are virtually full time (35+hours). –Some have several part time jobs. –Some have been forced to take cuts in the hours they work.

25. Problems with the Unemployment Rate C. PART TIME WORKERS –Similar to the problem with older male workers, we don’t really know the percentages in each category.

26. Problems with the Unemployment Rate D. WOMEN –There are a large number of women (up to 1 million), who would like to work, but can’t because they are:

27. Problems with the Unemployment Rate D. WOMEN –Taking care of children –Taking care of elderly parents –Taking care of sick family members.

28. Problems with the Unemployment Rate D. WOMEN –Similar to the problem of part time workers, we don’t know how many would choose to work if they could afford child care or home nursing care.

29. Problems with the Unemployment Rate E. BLURRING OF THE CATEGORIES. –In today’s economy, many retirees and homemakers work part time. –Many students work full or part time.

30. Problems with the Unemployment Rate E. BLURRING OF THE CATEGORIES -There are more than 2,000,000 people in prison, making furniture, jewelry, taking catalogue orders. -People in jail are working and competing with free labor!

31. Problems with the Unemployment Rate E. BLURRING OF THE CATEGORIES The consequence is to make it harder to determine if a person is in or out of the labor force.

32. Types of Unemployment

33. A.Frictional B.Seasonal C.Structural D.Cyclical

34. Types of Unemployment A. Frictional –Includes first time job seekers. –Includes moving between jobs. –Entirely voluntary.

35. Types of Unemployment B. Seasonal –Due to the nature of the job, work is only available part of the year. –Examples include construction workers, teachers.

36. Types of Unemployment C. Structural –Due to changes in technology and the structure of the economy. –Includes coal miners, farmers, bank tellers.

37. Types of Unemployment D. Cyclical Due to business cycle: –In periods of economic growth, low unemployment –In periods of recession, high unemployment Increasingly includes white collar workers.

38. Costs of Unemployment

39. A.Individual B.Social C.Economic

40. Costs of Unemployment A. To the Individual –Loss of income –Loss of benefits and health insurance –Loss of self esteem

41. Costs of Unemployment B. To Society –Increase in suicides –Increase in murders –Increase in alcohol and drug abuse related deaths and injuries –Increase in reported child and spouse abuse

42. Costs of Unemployment B. To Society –Increase in criminal activity –Increase in drug trafficking –Increase in welfare payments –Increase in taxes to pay for welfare

43. Costs of Unemployment C. To the Economy: The GDP Gap –GDP gap is defined as: Potential GDP – Actual GDP

44. Costs of Unemployment Potential GDP - The size of the GDP if the economy were at full employment. Actual GDP -Our best estimate of the current size of the GDP.

45. Costs of Unemployment The GDP Gap –Is an estimate of all the goods and services NOT produced because the economy is not at full employment. –The GDP gap is an estimate of the dollar cost of a recession.

46. Costs of Unemployment The GDP Gap –The more severe the recession is, the larger the GDP gap. –The longer a recession lasts, the larger the GDP gap.

47. Current Unemployment May 2011 15.0 million unemployed 8.6 million underemployed 1 million marginally attached = 24.6 million un or underemployed

48. Current Unemployment May 2011 The official unemployment rate is 9.1% The combined unemployment and underemployment rate rose to 15.8% * Source: Economic Policy Institute, www.epi.org

49. Current Unemployment August 2011 14.0 million unemployed 8.8 million underemployed 2.4 million marginally attached = 25.2 million un or underemployed

50. Current Unemployment August 2011 The official unemployment rate is 9.1% The combined unemployment and underemployment rate rose to 16.2% * Source: Bureau of Labor Statistics

51. Current Unemployment February 2012 12.8 million unemployed 8.1 million underemployed 2.6 million marginally attached = 23.5 million un or underemployed