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Chapter 13

Employment

© 2003 South-Western College Publishing

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Size and Composition of the Labor Force

Total labor forceall persons 16 years old or older, except

persons in prisons or mental institutions

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Size and Composition of the Labor Force

Civilian labor forceCivilian labor forceall persons in the total labor force except members of the resident armed forces

Labor force participation rateLabor force participation rateThe civilian labor force as a % of the civilian non-

institutionalized population

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Employed & Unemployed Labor Force

Employed labor forceEmployed labor forceAll employed workersIncludes persons who did not work at all during the

census week for various reasons Unemployed labor forceUnemployed labor force

All persons in the labor force who are not currently working but are seeking work

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Trends in the Labor Force & Employment

Older workers (65 years old and over)Decreased as a percentage of civilian labor force

Female workersNumber and percentage have increased

Skilled and unskilled workersPercentage of unskilled workers in U.S. labor force

has decreased Service-oriented jobs

Increase in number and percentage of civilian work force

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Trends in the Labor Force & Employment

Agricultural employmentDefinite move away from agricultural occupations

Organized workersUnion membership has decreased as a percentage of

the civilian labor force

DiversityIncreases in the number of Hispanics, blacks, Asians

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Types of Unemployment

FrictionalFrictional Arises from normal operation of the labor marketJob terminations by employees, discharges, or

relocation

CyclicalCyclicalArises from less than full use of productive capacity

in an economy due to recession

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Types of Unemployment

StructuralStructuralCaused 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 programsUnemployment compensationSupplementary unemployment benefits

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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 raterate of unemployment that can be expected

from normal frictional unemployment in an otherwise fully employed labor force

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Unemployment UnemploymentUnemployment

workers in the labor force are not currently working at all

UnderemploymentUnderemploymentworkers in the labor force are working, but

not to full capacity Natural rate of unemploymentNatural rate of unemployment

rate of unemployment that would occur if the economy was producing at its full potential

Humphrey-Hawkins Act

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International Comparisons of Unemployment Rates

Countries

Un

emp

loym

ent

Rat

e fo

r A

pril

200

214

12

10

8

6

4

2

0 U.S. Canada France Germany Great Italy Japan Britain

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Employment Effects of Minimum Wage

Qd Qe Qs

We

Wm

S

D

Number Employed

Wage

LayoffsUnemployed

Entrants

Minimum wage leads to a gap between the quantity of labor demanded and the quantity supplied at that wage

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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