1 / 19

Measuring Unemployment (Temperature of the nation)

Measuring a Nation’s Economic Health. Measuring Unemployment (Temperature of the nation). Describing Unemployment. Three Basic Questions: What types of unemployment exist? How does government measure the economy’s rate of unemployment? How long are the unemployed typically without work? .

konala
Télécharger la présentation

Measuring Unemployment (Temperature of the nation)

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Measuring a Nation’s Economic Health Measuring Unemployment(Temperature of the nation)

  2. Describing Unemployment Three Basic Questions: • What types of unemployment exist? • How does government measure the economy’s rate of unemployment? • How long are the unemployed typically without work?

  3. Natural Rate of Unemployment The Natural Rate of Unemployment is unemployment that will not go away. • It is the amount of unemployment that the economy normally experiences, even in the good times. • So, how do we know what is a healthy unemployment rate? • According to the Bureau of Labor Statistics: in-between 4% and 5%

  4. Categories of Unemployment The problem of unemployment is usually divided into two categories. • The natural rate of unemployment • This never goes away! • The cyclical rate of unemployment • This goes up or down depending on the business cycle.

  5. Unemployment rate Natural rate of unemployment Unemployment Rate Since 1955 Percent of Labor Force Business Cycle 10 8 6 4 2 0 1960 1965 1970 1975 1980 1985 1990 1998 2004

  6. How isUnemployment Measured?

  7. How is Unemployment Measured? Unemployment is measured by the Bureau of Labor Statistics (BLS). • It surveys 60,000 randomly selected households every month. • The survey is called the Current Population Survey.

  8. How is Unemployment Measured? Based on the answers to the survey questions, the BLS places each adult into one of three categories: • Employed • Unemployed • Not in the labor force

  9. Unemployment Rate An Unemployed Workeris: One who is 16 years or older (but not retired), not currently employed, AND is actively seeking employment. According to the Bureau of Labor Statistics: People are Not in the Labor Force if they are: • not actively seeking (wealthy or lazy), • under 16, • in the military, institutionalized (prison), retired, or in school.

  10. Who is not counted in the labor force Population Young and institution- alized Working-age population Not in labor force Those that choose NOT to work Labor Force Employed labor force Unemployed Labor Force Population (millions) 0 90 180 300 So the UNEMPLOYMENT RATE is a percentage of the LABOR FORCE that DOES NOT have a job.

  11. Who is not counted in the labor force Labor force (152.9 million) Adult population (230.9 million) (Another way to show it) Employed (146.1 million) Unemployed (6.8 million) To figure the Unemployment Rate: Unemployed (6.8) Labor Force (152.9) Not in labor force (78 million) 4.4% = Source: BLS March 2007 Employment Survey, http://www.bls.gov/news.release/

  12. Problems with the Unemployment Rate: It does not measure: Those that are UNDEREMPLOYED: • Their skills are above the job they have. • EXAMPLE: Someone with a Ph.D working at McDonalds Those that are falsely reporting that they are not seeking employment (or get paid under the table) only to get WELFARE. Underemployment -3 Min (Personal File) National Underemployment -3 Min (Personal File)

  13. What different types of unemployment exist and what type is good?

  14. Types of Unemployment BLS breaks down unemployment into FOUR types: 1) Frictional (not bad) 2) Seasonal (not bad) 3) Structural (getting worse) 4) Cyclical (the worst kind)

  15. Types of Unemployment 1) Frictional Unemployment • Arises from normal labor turnover: people entering and leaving the labor force. • People are in-between jobs. • Generally short-term and voluntary • People choose to do this because there are better jobs available. THIS TYPE OF UNEMPLOYMENT IS NOT BAD.

  16. Types of Unemployment 2.) Seasonal Unemployment • Unemployment caused by seasonal changes in labor demand during the year. • For example, during the winter months the demand for farm hands declines.

  17. Types of Unemployment 3.) Structural Unemployment • Arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs • Exists because unemployed workers often: • DO NOT have the skills demanded by employers, or • DO NOT live where their skills are in demand (there is a mismatch of skills or geographic location) EXAMPLE:As the older generation ages then they struggle to keep up with technology. They can lose there jobs to a younger generation that is familiar with technology.

  18. Types of Unemployment 4.) Cyclical Unemployment • Arises from the fluctuations of the business cycle. • Increases during a recession and decreases during an expansion. • The ONLY ONE DIRECTLY related to the BUSINESS CYCLE. EXAMPLE:Ford lays off employees because sales have plummeted over the past two quarters. Dumb & Dumber -1 Min (Personal File)

  19. UNEMPLOYMENT INSURANCE is a government program that partially protects workers’ incomes when they become unemployed. • Offers partial payment of former wages for a limited time to those who are laid off. • NOT ENTITLED TO THIS IF YOU GET YOURSELF FIRED. How doe the government help the unemployed? Government-Run Employment Agencies:give out information about job vacancies in order to match workers and jobs more quickly.

More Related