Learning Targets:
1. The student will understand major economic
indicators.
2. The student can identify and explain
economic indicators such as the GDP, CPI and
the Unemployment Rate.
• Today’s indicator: The Unemployment Rate
Macroeconomic Goals
• 1. Full Employment – an unemployment rate
low enough so people can find jobs, but not so
low as to cause wages to go up.
• 2. Price Stability – Average prices stable or
slowly increasing.
• Economic Growth – The GDP Per Person
increasing at a stable rate but not growing so
much as to increase prices.
UNEMPLOYMENT
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web
&cd=1&cad=rja&ved=0CC4QtwIwAA&url=http%3A%2F%2Fwww.y
outube.com%2Fwatch%3Fv%3D75SEy1qu71I&ei=qv1_UsToDqnXyg
HK2IHIBA&usg=AFQjCNF2iy_GQsn5AP9ZLL0X_IrZ366R1Q&sig2=GF
ArQjRCqto2O0Gojp8-hA&bvm=bv.56146854,d.aWc
http://www.youtube.com/watch?fea
ture=player_detailpage&v=EaqcC5zZ
5Fc
Obviously…
• …unemployment means that you are out of
work– laid off….fired…downsized…out of a
job.
• While this state may signal a “new beginning”,
it is usually not a pleasant status.
For the Government, “The Unemployed” is:
The portion of the labor force that is not working but
is willing and able and has actively looked in the past
30 days.
or
The percentage of the labor force actively seeking
work after looking during the past 30 days.
Natural Unemployment Rate = 4-6%
(Lowest rate w/o causing inflation)
U.S. POPULATION:
Non-Labor Force
NOT in Labor Force
•Under 16
•Institutionalized
•Retirees
•Military
•FT Students
•Stay-at-Home Parents
•Discouraged Workers
Labor Force
UNEMPLOYED
EMPLOYED
Or, as Khan Academy explains,
• http://www.pbs.org/newshour/rundown/201
0/02/khan-academy-how-to-calculate-theunemployment-rate.html
• This is a 2010 Khan video made for PBS
Newshour.
Now let’s practice by calculating a
classroom unemployment rate…
• Form groups of approximately 4 – 5
persons with the people right around
you. Choose a secretary (to write down
the numbers) and a spokesperson.
• Take the role given to you and be ready to
apply the questions of unemployment to that
or those persons.
For each identity given…
1. Are you currently working at a job outside
of school…
2. If not, are you not working by choice –
does not want a job…
3. Or, not working, no job, but gave up
looking.
4. Or, not working, no job, and has actively
(applied, interviewed, gone in?) looked in
the past 4 weeks.
Total up – for your group…and have your
reporter tell us…
• 1. # of people who currently have a job.
• 2. # of people who have no job, but have
actively looked in the past 4 weeks.
• …………………………………………………
• # of people who gave up.
• # of people who don’t want a job.
Total the numbers from the Smartboard…
• Calculate our classroom unemployment rate
by adding the employed to those actively
looking for work and not finding it, and then…
• Divide the # actively looking and not finding a
job by the total from above.
Current U.S. Unemployment Rate
• The “U-3” unemployment rate- the most commonly
reported rate is calculated by the Bureau of Labor
Statistics (BLS) and can be found at www.bls.gov.
• This rate is reported on the first Friday of the
month for the previous month.
• Last Friday the rate for October was reported
as 5.8%, up .1% from September.
Minnesota is almost always lower than
the nation’s average.
• Minnesota: 5.1% (August, 2013)
• Twin Cities: 4.7% (August, 2013)
• Nationally, the unemployment problem hits
some states harder than others, and some
counties harder within states.
• Which state(s) have the lowest (best)
unemployment situation? Can you suggest
why?
• Minnesota 10/14- 4.1% TC = 3.6%
The counting system presents some
problems, so other rates try to correct.
• The U-6 adds in those person who are working
part-time, but want full time work, and those
who are considered “discouraged workers”those who gave up looking.
• Current U-6: 13.8% (October, 2013) up .2%
from September.
Problems with the Unemployment Rate as an
Indicator of Economic Health
• Discouraged workers are ignored!
• This means people who do not look for work are not
counted.
• Involuntary part-time workers are considered as
working and in the labor force.
Types of Unemployment
Economists identify four types of unemployment.
Mike
islaid
temporarily
laid
off at
from
Example:
Bob
off structural,
from
his
a ishis
Example:
Megan’s
factory
is job
eliminated
The first three
–is
frictional,
and
seasonal
Example:
Tina
quits
her
job job
because
she
lifeguard
job
during
the
Minnesota
coffee
shop
a exist
recession
unemployment
– can
even
incauses
a growing
when
atonew
machine
iscold
invented
that adoes
unable
getwhen
the
hours
he
wants.
She
is
winter
months.
economy.
Thehuman
fourth,
cyclical
large
decrease
in be
the
demand
foranother
coffee. job.
not require
labor.
confident
she
will
able
tounemployment,
find
emerges during an economic downturn.
Frictional Unemployment
http://www.youtube.com/watch?f
eature=player_detailpage&v=Eaqc
C5zZ5Fc
Structural Unemployment
http://www.pbs.org/pov/seltzerwo
rks/
Cyclical Unemployment
Howondothese
these
Based
data,
what
generalizations
unemployment
can
youhelp
maketoabout
data
theexplain
health ofwhat
the U.S.
economy during the
you see in the
Great Depression?
photograph?
The government is MOST concerned with
cyclical unemployment and takes steps to
correct it.
What field are
“The best cure for unemployment is
economic growth.”
The Economic Costs of High Unemployment
• Lost potential output
– Produce inside PPC
• Economic cost for families
– Lost income, medical benefits, etc.
• Societal cost
– Loss of income taxes
– Unemployment pay/benefits
Let’s practice looking at some data…
Based
what explain
you
knowthe
about
During
which
of
these
years
Whaton
might
explain
the
What
might
the
unemployment
rate andrate
how
was
the
unemployment
fluctuations
between 1933
decrease
in unemployment
it’s
determined,
what
might
the
lowest?
The highest?
and
1940?
after
1940?
explain the rise in unemployment
Howondothese
these
Based
data,
what
generalizations
unemployment
can
you help
maketo
about
data
the
health of
the U.S.
explain
what
economy during the
you see in the
Great Depression?
photograph?
Go to the worksheet provided:
• Look at the graphs on the worksheet and
answer the questions for each.