HIGH RATES OF UNEMPLOYMENT HURTS THE ECONOMY The

• HIGH RATES OF UNEMPLOYMENT HURTS THE ECONOMY – The nation loses the goods and services that the unemployed would produce if they were working – Businesses lose sales because the unemployed cannot buy as many products

• US Census Bureau – Considered Employed if: worked for pay or profit one or more hours, worked without pay in a family business 15 or more hours, have jobs but did not work because of illness, weather, vacations, or labor disputes

• The most closely watched and highly publicized labor force statistic • It is the percentage of people in the civilian labor force who are unemployed • Unemployment is higher during a recession

• Unemployment rate does not measure all aspects of unemployment 1. Does not indicate the differences in intensity with which people look for jobs

2. Excludes some individuals who most people would think of as unemployed • Marginally attached workers: once held productive jobs but have given up looking for work • Discouraged workers: people who want a job but have stopped looking for work for job-related reasons

3. Does not indicate the number of underemployed workers. Workers who have jobs beneath their skill level or who want full-time work but are only able to find part-time jobs these people are considered UNDEREMPLOYED

• DOES NOT MEAN EVERYONE HAS A JOB AND THE UNEMPLOYMENT RATE IS ZERO • UNEMPLOYMENT RATE AT ABOUT 5% WOULD BE CONSIDERED FULL EMPOLYMENT

1. 2. 3. 4. FRICTIONAL STRUCTURAL SEASONAL CYCLICAL

1. Frictional: in-between jobs – person leaves job to find another job, during that person’s search he or she is considered frictionally unemployed

2. Structural: unemployment as a result of changes in technology or in the way the economy is structured. Example - Machines take jobs away or people do not want product anymore Example: some industries decline and even disappear as natural resources in a region are used up

• Seasonal: job depends on season • FARMER

• Cyclical: unemployment resulting from recessions and economic downturns. – Harms economy more than any other type of unemployment (when sales decline producers tend to decrease output & lay off workers – Then as economy expands demand for goods and services expand producers hire more workers to increase output