Unemployment

Unemployment Full employment: The nation is considered at full employment when the unemployment rate is around 4-6% (no cyclical unemployment) Unemployed: 16 or older and looking for a job Labor Force: # of people 16 or older with a job (employed) & # of people Unemployed (employed + unemployed) Unemployment Rate (UR): % of labor force that is unemployed

Employment Discouraged Workers: Underemployed: Given up looking for work. Not counted in the unemployment numbers. Make the UR look better than it really is Underemployed: overqualified for employment position, working part time but want full time, working poor. These people are part of the labor force and are NOT unemployed

Four Types of Unemployment Frictional: People are between jobs or looking for their first job. Considered long run unemployment because this unemployment rate is relatively stable over time. Examples: Each May, New college graduates start looking for jobs

2. Structural Absence of demand for a certain type of worker. Mismatch between the types of skills workers have and the skills employers want. Considered long run because unemployment rate is stable over time. Need new training to gain skills employers need Not many people working in a Record factory

3. Seasonal unemployed because employers only need their skills during a certain part of the year. Long-run. Examples: Lifeguards, farm workers, holiday employees

4. Cyclical: Unemployed due to the up and down cycle of the economy. If economy expands, these people will go back to work. Short run

The Labor Force and Unemployment Activity