1. Economic Challenges Unemployment

2. Unemployment What’s a good definition for Unemployment? –A condition in which a willing worker is lacking a job (and looking for one). In America, we further define it this way: –Willing Worker: someone age 16 or older –Lacking a job: and actively seeking one

3. Four Types of Unemployment 1.Frictional Unemployment -Unemployment that occurs because people are taking time to find a job

4. Four Types of Unemployment 1.Frictional Unemployment (cont) -This includes: -People who quit one job and are looking for another job -People who have been out of the work force for a while and are trying to reenter -People just graduating from High School or College and looking for their first job

5. Four Types of Unemployment 1.Frictional Unemployment (cont) -This DOES NOT include people who are NOT looking for work.

6. Four Types of Unemployment 2. Seasonal Unemployment - Unemployment that occurs as a result of a business closing down or slowing down for part of the year - Examples: Migrant Farm Workers Ski Instructors

7. Four Types of Unemployment 3. Structural Unemployment - Caused when workers skills don’t match available jobs - Five Causes A. New Technology: The car caused many horse related jobs to no longer be needed.

8. Four Types of Unemployment 3. Structural Unemployment B. New Resources: Petroleum replaced many animal fat products, in particular whale-oil C. Changes in Demand: More people wear tennis shoes today than traditional shoes

9. Four Types of Unemployment 3. Structural Unemployment D. Globalization: Cheaper labor in other countries moves some businesses away E. Lack of Education: People lacking basic job skills are often quickly fired.

10. Four Types of Unemployment 4. Cyclical Unemployment: Unemployment caused by economic downturns

11. Measuring Unemployment To get the unemployment rate: 1.Take the number of people unemployed 2.Divide by the total number of people in the workforce (employed + unemployed) 3.Multiply by 100

12. Measuring Unemployment If there are currently 7.7 million people unemployed And 140.5 million people employed What is the unemployment rate? (7.7 ÷ (7.7+140.5)) x 100 = (7.7 ÷ 148.2) x 100 =.052 x 100 = 5.2%

13. Full Employment In a Market Economy can Unemployment ever reach 0% ? NO! Frictional, Seasonal and Structural Unemployment are GOOD things. Only Cyclical Unemployment is BAD Full Employment: when Cyclical Unemployment is 0%

14. Full Employment Underemployment: people working for jobs that they are overqualified for. Discouraged Workers: people who have given up trying to find a job –Are Discouraged Workers counted in the unemployment rate? –No. Only people looking for jobs