Chapter 13
Employment
© 2003 South-Western College Publishing
1
Size and Composition
of the Labor Force

Total labor force
all persons 16 years old or older, except
persons in prisons or mental institutions
2
Size and Composition
of the Labor Force
Civilian labor force
all persons in the total labor force except
members of the resident armed forces
Labor force participation rate
The civilian labor force as a % of the civilian noninstitutionalized population
3
Employed & Unemployed Labor
Force
Employed labor force
All employed workers
Includes persons who did not work at all during the
census week for various reasons
Unemployed labor force
All persons in the labor force who are not currently
working but are seeking work
4
Trends in the Labor Force &
Employment
Older workers (65 years old and over)
Decreased as a percentage of civilian labor force
Female workers
Number and percentage have increased
Skilled and unskilled workers
Percentage of unskilled workers in U.S. labor force
has decreased
Service-oriented jobs
Increase in number and percentage of civilian work
force
5
Trends in the Labor Force &
Employment
Agricultural employment
Definite move away from agricultural occupations
Organized workers
Union membership has decreased as a percentage of
the civilian labor force
Diversity
Increases in the number of Hispanics, blacks, Asians
6
Types of Unemployment
Frictional
Arises from normal operation of the labor market
Job terminations by employees, discharges, or
relocation
Cyclical
Arises from less than full use of productive capacity
in an economy due to recession
7
Types of Unemployment
Structural
Caused by imbalance between worker skills and
skills demanded by the labor market
Some argue that unemployment may also be
consequence of subsidies provided by public
and private socioeconomic programs
Unemployment compensation
Supplementary unemployment benefits
8
Full Employment
Employment Act of 1946
Meaning of full employment
full utilization of natural resources,
technology and science, farms, factories,
knowledge, and trade skills
Full employment unemployment rate
rate of unemployment that can be expected
from normal frictional unemployment in an
otherwise fully employed labor force
9
Unemployment
Unemployment
workers in the labor force are not currently
working at all
Underemployment
workers in the labor force are working, but
not to full capacity
Natural rate of unemployment
rate of unemployment that would occur if
the economy was producing at its full
potential
Humphrey-Hawkins Act
10
International Comparisons of
Unemployment Rates
14
Unemployment Rate
for April 2002
12
10
8
6
4
2
0
U.S. Canada France Germany Great Italy
Britain
Japan
Countries
11
Employment Effects
of Minimum Wage
Wage
Layoffs
Unemployed
Entrants
Wm
S
Minimum wage leads
to a gap between the
quantity of labor
demanded and the
quantity supplied at
that wage
We
D
Qd
Qe
Qs
Number Employed
12
Employment Effects of Minimum
Wage




Increases do benefit workers who keep their
jobs
However, the net effect is a loss of jobs
Studies have suggested that the latest increase
in the minimum wage has eliminated between
130,000 and 400,000 jobs
Not all agree that a decline in teenage
employment results from increases in the
minimum wage
13