Understanding Unemployment, and its impact on the economy, economic growth and GDP.
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Employed: people who are currently holding a job either part time or full time
Unemployed: people who are actively looking for work but aren’t currently employed
Labor Force: is equal to the sum of the employed and the unemployed
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Labor force participation rate: is the percentage of the population aged 16 and older that is in the labor force.
Labor force participation rate=
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______ Labor force_______________
Population age 16 and older
X 100
Unemployment Rate: is the % of the total number of people in the labor force who are unemployed.
UR = # of unemployed workers x100
Labor Force
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Discouraged workers: non-working people who capable of working but have given up looking for a job due to
the state of the job market.
Marginally attached workers: would like to work and have looked for a job in the recent past but are not
currently looking.
Underemployed: people who work part time and want full time or who are overqualified for their jobs.
Three types of Unemployment:
Frictional:
Structural:
Cyclical:
1. Which two will an economy always have?
2. Which one is observed when we have a recession?
https://www.youtube.com/watch?v=Hx39Eh5GsUU
What is the NRU?
https://www.youtube.com/watch?v=lgn4auz1wPE
Let’s look together at the following statistics on unemployment.
http://www.bls.gov/web/laus/lauhsthl.htm
http://www.bls.gov/lau/stalt.htm
1. What do you notice?
2. What do the U4, U5 and U6 measure?
3. Scroll all the way down and read the summary. Which states have the lowest underutilization and which states
have higher rates? Why might that be?
4. Why would the government only report U3 as opposed to reporting the actual U6 unemployment rate?
Last point ***** The BLS narrows the population by categorizing only those citizens above the age of 16 who are not
serving in the armed forces, incarcerated or institutionalized etc.. The population is then divided into three groups.
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Those who are working at least 1 hour per week (the employed)
Those not working at least 1 hour per week (the unemployed)
Those not in the labor force
Summary: Labor Force = Employed + Unemployed
Watch Mr. Clifford for a wrap up.
https://www.youtube.com/watch?v=iUeIHvncYkM