Today’s Schedule – 10/30
• Ch. 11 & 12.2 Quiz
• Finish Daily Show Clip
• PPT:
– 13.1: Unemployment
– 13.4: Poverty
• Activity: Life Happens
• HW:
– Cont. Read Ch. 13, Sections 1 & 4
Today’s Schedule – 10/31
• Finish PPT:
– 13.1: Unemployment
– 13.4: Poverty
• Activity: Life Happens
• HW:
– Read Ch. 13, Section 2
UNEMPLOYMENT
Types of Unemployment
1. Frictional Unemployment
2. Seasonal Unemployment
3. Structural Unemployment
4. Cyclical Unemployment
1. Frictional Unemployment
• When people take their time to find a job
• Example: Changing jobs, taking time off
to help family, taking time off after school
• Unemployment pay can lessen the
pressure to find a job
2. Seasonal Unemployment
• Unemployment that occurs as a result of
harvest schedules, vacations, or
industries that slow or shut down during
certain seasons
• Government does not intervene in this
type of unemployment because it is seen
as healthy
• Example: Migrant farm workers, pool
workers
3. Structural Unemployment
• When the structure of the economy
changes, the skills of the workers needs
to change as well
–Think of the changes in the history of
the U.S. market from agriculture to
industrial to technological, etc.
• When the structure changes, workers
without the new skills will lose their jobs
3. Structural Unemployment
• Five causes of structural unemployment:
1. Development of new technology
2. Discovery of new resources
3. Changes in consumer demand
4. Globalization
5. Lack of education
4. Cyclical Unemployment
• Unemployment that rises during
economic downturns and falls when the
economy improves
• During recession, demand for G &S drops
 slowdown in production  drop in
demand for labor  companies begin to
layoff workers
–Workers are typically rehired once the
economy improves
4. Cyclical Unemployment
• The worst example of this was the Great
Depression
–1 out of 4 workers was unemployed
–Government set up Social Security and
Unemployment Pay as a result
Measuring Employment
• Each month the BLS polls 50,000 random
families about their employment for the
month
• From these polls they calculate the
unemployment rate (percentage of the
nation’s labor force that is unemployed)
Full Employment
• Means that everyone who wants a job
has a job- is this possible?
–Does not mean they are
happy/satisfied with their job
• Underemployment: working at a job for
which you are overqualified or working
part time when you want to work full
time
Discouraged Workers
• People who have stopped searching for a
job
–Rely on family or savings to support
themselves
–These people are not calculated into
the unemployment rate by the BLSwhy not?
POVERTY
Who Are We Talking About?
• Family: A group of two or more people
related by birth, marriage or adoption
who live in the same housing unit
• Household: All people who live in the
same housing unit regardless of how they
are related
Poverty Threshold
• Poor Family: When a family’s income is
less than the amount needed to meet
minimum needs
• Poverty Threshold: The income level
below which income is insufficient to
support a family or household
–This varies based on the size of a family
Poverty Threshold Examples
Single parent under 65 with one kid =
$12,490
Family of 4 including 2 kids = $18,850
Poverty Rate
• Percentage of people who live in household
with income below the official poverty
threshold
• Poverty indicators:
–Race and ethnicity
–Type of family
–Age
–Residence
Race and Ethnicity
• The poverty rate among African
Americans and Hispanics is more
than twice the rate for white
Americans
Type of Family
• Families with a single mother have a
poverty rate almost six (6) times
greater than that of two parent
families
–One persons incomes vs. having
two incomes
Age
• Children make up the greatest
percentage of those living in poverty
followed by young adults (that
means people YOUR age!)
Residence
• People living in the inner city have double
the poverty rate of those who live
outside the inner city
–Why would this be the case?
–Where are the jobs?
• People who live in rural areas have higher
poverty rate
Causes of Poverty
• A family is poor when the adults fail to
earn enough income to support the
family’s basic needs
–Often due to unemployment
• 1 million Americans are unemployed
• Chronic health problems
–However, more than half of poor
families have one person who works at
least part time and 1 in 5 work full time
Causes of Poverty
1. Lack of Education
2. Location
3. Racial/Gender Discrimination
4. Economic Shifts
5. Shifts in Family Structure
Lack of Education
• Someone who is a high school drop out
on average earns $18,344- just barely
above the poverty threshold for a family
of four (4)
Location
• People who live in the inner city earn less
than those living in the suburb
–Same for people living in rural
communities
Racial and Gender Discrimination
• White workers earn more than minority
workers
• Men earn more than women
• Often due to differing hours worked,
education and work experience
• This type of discrimination has been
decreasing in recent years
Economic Shifts
• Those with less education are often the
first to be laid off when the economy is
poor
• Outsourcing of jobs often most effects
those with limited education as those
types of jobs are typically manufacturing
based
Shifts in Family Structure
• Divorce rate has been on the rise since
the 1960s
• Number of children born to unmarried
parents has also been on the rise
• These type of family structures tend to
have higher poverty rates
Income Distribution
• How the nation’s total income is
distributed among its population
• Average income is $43,318
–Half the population is above this
–Half the population is below this
Income Inequality
• We have one of the highest GDP rates, yet
millions of people living below the poverty
threshold
– How is this possible?
– Have to look at how the income is distributed
• Highest 1/5 of the population receives
49.8% of all income in the United States
• Lowest 1/5 of the population receives 3.4%
of all income in the U.S.
Income Gap
• Why is there a difference in what people
earn?
–Differences in skills and education
–Inheritances (receiving money and
earned money through investments)
–Type of work
• High demand  low supply = high
wages
Poverty Assistance
1. Enterprise Zones
2. Employment Assistance
3. Welfare Reform
Enterprise Zones
• Areas where businesses can locate
without having to pay taxes
Employment Assistance
• Job training programs to help workers
gain skills needed to get jobs; minimum
wage salaries
Welfare Reform
• System that provides basic needs,
especially for children and the elderly
• Often receives criticism that it
encourages the poor to stay unemployed
• New legislation requires a move from
welfare to workfare (requiring work to
receive aid)