And UNEMPLOYMENT

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THE LABOR FORCE: Includes all the members of the population who are employed or actively looking for work Only adults (ages 16 +) who are NOT incarcerated DISCOURAGED WORKERS: people not in the labor force; they want to work but have given up looking for a job because they don’t believe any are available UNDEREMPLOYED WORKERS: work at jobs which pay below their skill level; often work 2 or more jobs; are counted

AVERAGE LABOR PRODUCTIVITY a measure of how much the typical worker can produce Mathematically, this is the economy’s AVG. LABOR = TOTAL OUTPUT (GDP) PRODUCTIVITY TOTAL # OF WORKERS

UNEMPLOYMENT: UNEMPLOYMENT RATE: the number of people employed divided by the labor force

4 TYPES OF UNEMPLOYMENT STRUCTURAL CYCLICAL FRICTIONAL SEASONAL

Video Tutorial : Go to ECON LINKS PAGE and scroll to VIDEO TUTORIALS: MACROECONOMICS and choose Episode 19: TYPES OF UNEMPLOYMENT (4:19) Episode 19: TYPES OF UNEMPLOYMENT (4:19)TYPES OF UNEMPLOYMENT

STRUCTURAL UNEMPLOYMENT Results from changes in the goods that consumers demand Results from changes in TECHNOLOGY – PROGRESS! “Gale of creative destruction” – Joseph Schumpeter It’s a mismatch between SKILLS workers possess and SKILLS the market demands (People don’t want BUGGY WHIPS; they want STEERING WHEELS now!)

CYCLICAL UNEMPLOYMENT Due to fluctuations in the business cycle MOST SERIOUS TYPE: the economy is in trouble CONTRACTING IN A TROUGH IN A RECESSION RECESSION: two consecutive quarters (6 mo.) of negative growth in GDP DEPRESSION: eight consecutive quarters (2 yrs.) of negative growth in GDP

FRICTIONAL UNEMPLOYMENT Results from the time-lag between when a worker is fired or quits his job and when he finds a new one Job searching, applying and interviewing, relocating, and moving up! Can NEVER be eliminated (only reduced) Not always bad! (quit a crummy job for a better one!)

SEASONAL UNEMPLOYMENT: Jobs are associated with seasons Lifeguards = unemployed in the winter Roofers = work during hot summer

NATURAL UNEMPLOYMENT RATE Even when the ECONOMY is at FULL EMPLOYMENT, some types of UNEMPLOYMENT are inevitable: --frictional (main component of natural unemployment) --seasonal (least serious) --STRUCTURAL (serious) due to progress! (Think buggy whips)

Recently viewed as 4 to 5 %, but could be moving up!

Current Unemployment Rate Nov. 2010: 9.8%

Newshour Reports: REALITIES of the Recession & Changing Workforce (20:44) REALITIES of the Recession & Changing Workforce UNEMPLOYMENT - Many Left Uncounted (10:53) UNEMPLOYMENT - Many Left Uncounted FINDING WORK (7:21) FINDING WORK LENGTHY JOBLESSNESS TAKES TOLL ON 99ers (9:19) STRESS and BURNOUT TAKING TOLL on WORKERS STRESS and BURNOUT TAKING TOLL on WORKERS (7:53)

CARDS UP on EMPLOYMENT!

1. Which of the following groups is part of the labor force? a. people in prison b. people in the army c. people who are retired d. people under sixteen e. people counted in the unemployment rate

2. Frictional unemployment is caused by a. obsolete (outdated) skills b. economic downturn c. high inflation d. undervalued currency e. time-lag between jobs

3. Structural unemployment is caused by a. skills mismatch b. undervalued currency c. economic downturn d. high inflation e. time-lag between jobs

4. Cyclical unemployment is caused by a. time-lag between jobs b. economic downturn c. undervalued currency d. high inflation e. skills mismatch

1 26. Bob is laid off during a recession. He is a. frictionally unemployed b. seasonally unemployed c. cyclically unemployed d. structurally unemployed e. technologically unemployed

3. Bill’s is a roofer. He doesn't work in Dec.-Mar. He's a. seasonally unemployed b. structurally unemployed c. cyclically unemployed d. technologically unemployed e. frictionally unemployed

28. Betty lost her job as a key punch operator when the computer industry advanced to optical scanning and other easier forms of input: a. seasonally unemployed b. frictionally unemployed c. technologically unemployed d. structurally unemployed e. cyclically unemployed

5. Jill recently quit her job as a restaurant hostess because she just finished college and is going to work as a physical therapist. a. technologically unemployed b. cyclically unemployed c. seasonally unemployed d. structurally unemployed e. frictionally unemployed

6. An abnormally high rate of which type of unemployment indicates a problem in the economy? a. seasonal b. frictional c. structural d. technological e. cyclical

7. Which of the following is not counted in the natural rate of unemployment and indicates a problem in the economy? a. frictional unemployment b. technological unemployment c. cyclical unemployment d. seasonal unemployment e. structural unemployment

8. In the United States, the natural rate of unemployment is approximately a. 2% b. 15% c. 0% d. 10% e. 5%

END OF QUIZ

Video Tutorial on UNIONS: ECONOMICS USA: Program #9 LABOR AND MANAGEMENT (30:00)LABOR AND MANAGEMENT