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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