Labor Force and Unemployment Vocabulary Labor Force People

Labor Force and Unemployment

Vocabulary Labor Force- People within the working age (over 16) who are employed or unemployed and seeking work. Employed- people who worked full-time or part-time during the past week or on vacation or sick leave. Underemployed- People who could be working for a full week but can only find part time work. People with high skill levels in low wage jobs.

Vocabulary Unemployed- people who did not work during the preceding week but made some effort to find work in the past 4 weeks. Out of the Labor Force- people who did not work in the past week and did not look for work. People who are neither employed or unemployed. Discouraged Workers- People who would like to have a job but have made no effort in the past 4 weeks.

Types of Unemployment Frictional- includes workers who are either searching for jobs or waiting to take jobs in the near future. - workers transitioning between jobs -students who have recently graduated

Types of Unemployment Structural- caused by changes in the structure of demand for consumer goods and in technology. -workers unemployed because skills not demanded by employers -lack sufficient skills to obtain employment -cannot easily move to locations where jobs are available

Seasonal- caused by changes in the seasons of the year. ◦ A type of structural unemployment in which workers do not have skills or desire to work year round ◦ Lawn care, snow plowing, roofing etc.

Types of Unemployment Cyclical- cause by the recession phase of the business cycle, that is, by deficiency of total spending. - as demand for goods and services decreases, less labor is needed

Unemployment Rate Key indicator of the state of the labor market When the unemployment rate is high, work is hard to find People who do have jobs typically find it harder to get promotions or wage increases

Unemployment Rate Determined by dividing the number of unemployed people by the total labor force

What is poverty ◦ Poverty – income is below what is considered necessary for the minimum standard of living ◦ Poverty threshold (line) – the level set by the government that determines what is considered poor ◦ Poverty rate – the percentage of people below the poverty line

The problem of poverty ◦ Factors affecting poverty Education Discrimination Demographic trends (single parents, need for 2 incomes etc) Changes in labor force (high pay requires high skill now) Personal Choices ◦ Income distribution – The way the nations income is divided among people ◦ Income inequality – unequal distribution of income

Antipoverty programs ◦ Programs for low-income households Welfare – all of the programs that the government has to help people Food stamps (bridge card) WIC Workfare

What is inflation and how is it measured? ◦ Inflation – sustained rise in the general price level or a fall in the purchasing power of money ◦ Consumer price index (CPI) – measure of changes in the price of goods that consumers generally buy ◦ Producer price index (PPI) – measure of changes in the wholesale prices ◦ Inflation rate – the rate of change in prices over a set period of time ◦ Types of inflation Hyperinflation – rapid uncontrolled inflation Deflation – decrease in the price level

What causes inflation? ◦ Demand pull inflation – total demand rises faster than the production of goods and services People demand more of a product than is produced, Law of demand says prices will rise Government prints more money consumers demand more products ◦ Cost push inflation – increases in cost push prices up Wage price spiral – workers get a raise production costs go up workers demand another raise to pay for higher priced goods producers raise prices again

What is the impact of inflation ◦ Effect 1 – decreasing value of the dollar ◦ Effect 2 – increase in interest rates (lenders need to make sure that they get money back in real dollars) ◦ Effect 3 – decreasing real return on investment – if you earn $100 on an investment over 10 years how much can that $100 actually buy?