UnemploymentUnemployment

Review

• The Labor Force - all individuals who are employed or unemployed. Does not include military, full time students, and retired. Individuals able and willing to work.

• Unemployed - those looking for a job, but don’t have one.

Types of Unemployment

•Frictional Unemployment

•Structural Unemployment

•Cyclical Unemployment

Frictional Unemployment• “Temporarily Unemployed” - Time between jobs,

time after school or training, changing careers. Technically based on choice of the employee or employer, because their skills can transfer to new careers and be useful.

• Frictional Unemployment - when people take time to find a job.

• Seasonal Unemployment - a type of frictional unemployment, when industries slow or shut down for a season or make seasonal shifts in their production schedules. Skills still transfer to new careers. This type of unemployment does less harm. because it is expected.

Structural Unemployment

• Structural Unemployment - when workers’ skills do not match the jobs that are available. When worker’s skills do not transfer between careers.

• When the structure of the economy changes, the skills that workers must have in order to succeed in the economy also change. Workers forced to adapt or gain new skills in order to remain employed.

Caused by changes Caused by changes in the in the economy, economy,

industries, industries, technology, technology, consumer consumer

preferences.preferences.

Cyclical Unemployment• Cyclical Unemployment - unemployment

that rises during economic downturns and falls when the economy improves.

Happens more in a struggling

economy.

• Unemployment Rate - the percentage of the nation’s labor force that is unemployed. The Natural Unemployment Rate for a healthy economy is between 4% and 6%

• Full Employment - the level of employment reached when no cyclical unemployment exists. Structural and Frictional Unemployment are acceptable.

• Discouraged Workers - have stopped searching for employment and may need to rely on other family members or savings to support them.

Poverty

Poverty Rate - the percentage of people who live in households with income below the official poverty threshold.

Current Poverty Rate: 16% of total population, 20% of children

Poverty Threshold - the income level below which income is insufficient to support a family or household.

Poverty Threshold for a family of 4: $23,050

Poverty Threshold for a single person: $11,170

Causes of Poverty

Location - individuals living in rural areas or inner city communities are less likely to have the ability to commute to higher paying jobs elsewhere.

Lack of Education - those with lesser education typically have fewer skills, are qualified for fewer occupations, and typically earn a smaller wage in the workforce. This often keeps individuals and

Racial and Gender Discrimination - white workers generally earn more than minority workers, and men generally earn more than women. Even when all labor factors are the same (education, experience, performance, etc.), whites and men will often earn higher wages and receive jobs before many minorities and women.

Economic Shifts - When the economy is expanding or contracting during a business cycle, those with less education and skills are often “the last hired and the first fired.”

Shifts in Family Structure - Increased divorce rates and child births to unmarried parents, there has been an increase of single parent families and children living in poverty.