How do we calculate unemployment rates and what does it tell us?

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Presentation transcript:

How do we calculate unemployment rates and what does it tell us?

What is the labor force? Each month the Bureau of Labor Statistics (BLS) assembles information on the labor force

What is the labor force? Let’s start by figuring who it’s not Military personnel Institutionalized population Under 16 years old People who don’t want a job Stay-at-home parents Retired people Students Discouraged workers

What is the labor force? Let’s start by figuring who it’s not Military personnel Institutionalized population Under 16 years old People who don’t want a job Stay-at-home parents Retired people Students Discouraged workers who have given up looking for a job

What is the labor force? Let’s start by figuring who it’s not Military personnel Institutionalized population Under 16 years old People who don’t want a job Stay-at-home parents Retired people Students Discouraged workers who have given up looking for a job

What is the labor force? Let’s start by figuring who it’s not Military personnel Institutionalized population Under 16 years old People who don’t want a job Stay-at-home parents Retired people Students Discouraged workers who have given up looking for a job

What is the labor force? Let’s start by figuring who it’s not Military personnel Institutionalized population Under 16 years old People who don’t want a job Stay-at-home parents Retired people Students Discouraged workers

What is the labor force? Let’s start by figuring who it’s not Military personnel Institutionalized population Under 16 years old People who don’t want a job Stay-at-home parents Retired people Students Discouraged workers who have given up looking for a job

What is the labor force? Let’s start by figuring who it’s not Military personnel Institutionalized population Under 16 years old People who don’t want a job Stay-at-home parents Retired people Students Discouraged workers who have given up looking for a job

Another way of looking at it

Unemployment requirements To be considered unemployed, you have to answer yes to all of these questions 1. Over the age of Actively looking for work. 3. Unable to find any work, even part-time What are ways the number of people classified as “unemployed” can get smaller, without actually meaning the economy is getting stronger?

Is this person unemployed?

How to calculate unemployment The number of unemployed people The labor force (divided by)

Unemployment Rate Practice Assume a nation has 100 people total. Forty-five of them have jobs, and five of them are looking for jobs but cannot find them. The rest don’t have jobs and don’t want them.

Unemployment Rate Practice Assume a nation has 100 people total. Eighty of them have jobs, and twenty of them are looking for jobs but cannot find them. The rest don’t have jobs and don’t want them.

Unemployment Rate Practice Assume a nation has 100 people total. Ten of them have jobs. The rest don’t have jobs and don’t want them.

Question Could we ever have an unemployment rate of 0%? Why or why not? Is that automatically a bad thing? What is an acceptable unemployment rate?

Types of unemployment Frictional—people entering the workforce for first time or re-entering after taking time off, people who move or quit their current job because they’d like to try something new Examples:

Types of unemployment Seasonal—people who temporarily lose their job every year around the same time because the job itself depends upon the season Examples:

Types of unemployment Cyclical—people who lose their jobs because of recessions Examples:

Types of unemployment Structural/Technological—people who lose their jobs because the economy itself is changing, particularly with the adoption of technology Examples:

Education and employment

Oil boom town? What is the impact of new jobs in the oil boom towns of North Dakota?

Top 10 then and now What are the differences in the top 10 employers in the 1950s and now?