TM 8-1 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment Population Survey Every month, the U.S. Census Bureau surveys 60,000 households and asks a series of questions about the age and job market status of its members. Called the Current Population Survey

TM 8-2 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment Population Survey The working age population is the total number of people aged 16 years an over who are not in a jail, hospital, or some other form of institutional care.

TM 8-3 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment Population Survey The working age population is divided into those in the labor force and those not in the labor force. The labor force is divided into the employed and the unemployed.

TM 8-4 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment To be counted as unemployed, a person must be available for work and must be in one of three categories: 1) Without work but has made specific efforts to find a job within the previous four weeks

TM 8-5 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment To be counted as unemployed, a person must be available for work and must be in one of three categories: 2) Waiting to be called back to a job from which he or she has been laid off

TM 8-6 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment To be counted as unemployed, a person must be available for work and must be in one of three categories: 3) Waiting to start a new job within 30 days

TM 8-7 Copyright © 1998 Addison Wesley Longman, Inc. Population Labor Force Categories Population (millions)

TM 8-8 Copyright © 1998 Addison Wesley Longman, Inc. Population Labor Force Categories Population Population (millions)

TM 8-9 Copyright © 1998 Addison Wesley Longman, Inc. Population Labor Force Categories Young and institution- alized Population Working-age population Population (millions)

TM 8-10 Copyright © 1998 Addison Wesley Longman, Inc. Population Labor Force Categories Young and institution- alized Population Working-age population Population (millions) Not in labor force Labor force

TM 8-11 Copyright © 1998 Addison Wesley Longman, Inc. Population Labor Force Categories Not in labor force Young and institution- alized Population Working-age population Labor force Employment Unemployment Population (millions)

TM 8-12 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment Three Labor Market Indicators The unemployment rate The labor force participation rate The employment-to-population ratio

TM 8-13 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment Rate The unemployment rate is the percentage of the people in the labor force who are unemployed. Unemployment rate = Number of people unemployed Labor force  100

TM 8-14 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment Rate The unemployment rate is the percentage of the people in the labor force who are unemployed. Labor force = Number of people employed + Number of people unemployed

TM 8-15 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment Rate The labor force participation rate is the percentage of the working-age population who are members of the labor force. Labor force participation rate = Labor force Working age population  100

TM 8-16 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment Rate Discouraged Workers People who are available and willing to work but have made not made specific efforts to find a job within the previous four weeks.

TM 8-17 Copyright © 1998 Addison Wesley Longman, Inc. Employment, Unemployment, and the Labor Force: 1960–1996

TM 8-18 Copyright © 1998 Addison Wesley Longman, Inc. The Changing Face of the Labor Market

TM 8-19 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment and Full Employment People become unemployed if they: 1) Lose their jobs and search for another job. 2) Leave their jobs and search for another job. 3) Enter or reenter the labor force to search for a job.

TM 8-20 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment and Full Employment Entrants are people who are entering the labor force. Reentrants are people who have previously withdrawn from the labor force. Reentrants/entrants are a large component of the unemployed Numbers fluctuate mildly

TM 8-21 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment by Reasons

TM 8-22 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment by Duration Percentage of unemployment 1040 Business cycle peak Business cycle trough Less than 5 weeks 5-14 weeks weeks 27 weeks and over

TM 8-23 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment by Demographic Group Unemployment rate 1040 Business cycle peak Business cycle trough Black males Black females White males White females Black males 20 and over Black females 20 and over White males 20 and over White females 20 and over

TM 8-24 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment and Full Employment There are three types of unemployment: 1) Frictional 2) Structural 3) Cyclical

TM 8-25 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment and Full Employment Frictional Unemployment Arises from normal labor turnover — people entering and leaving the labor force and the creation and destruction of jobs Influenced by unemployment benefits

TM 8-26 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment and Full Employment Structural Unemployment Arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs Typically lasts longer than frictional

TM 8-27 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment and Full Employment Cyclical Unemployment Arises from the fluctuations of the business cycle Increases during a recession and decreases during and expansion The natural rate of unemployment excludes cyclical unemployment

TM 8-28 Copyright © 1998 Addison Wesley Longman, Inc. Unemployment and Full Employment Full employment exists when the unemployment rate equals the natural rate of unemployment. It fluctuates periodically Economists disagree about the size of the natural rate and the extent to which it fluctuates