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intromacrounemployment.pdf
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Unemployment
October 8, 2019
1.
2.
3.
4.
How do economists define unemployment?
Why do economists use this definition?
Who measures unemployment?
What types of unemployment exist?
Some questions economists ask
1. How many people are unemployed?
2. How did they become unemployed?
3. How long have they been unemployed?
4. Are their numbers growing or declining?
5. Are they men or women?
6. Are they young or old?
7. How much education do they have?
8. Are they concentrated in one area of the country more
than another?
Collecting the Data
Early each month, the Bureau of Labor Statistics (BLS) of the
U.S. Department of Labor announces the unemployment
statistics.
The Census Bureau conducts a monthly survey of 60,000
eligible sample households called the Current Population
Survey (CPS) to measure the extent of unemployment in the
country.
The survey excludes people
1. Under the age of 16 (there is no upper age limit)
2. Living in institutions (for example, a correctional
institution or a residential nursing or mental health care
facility)
3. On active duty in the Armed Forces
Some people think that to get these figures on unemployment,
the government uses the number of people collecting
unemployment insurance (UI) benefits under state or federal
government programs. But some people are still jobless when
their benefits run out, and many more are not eligible at all or
delay or never apply for benefits.
Other people think that the government counts every
unemployed person each month. To do this, every home in the
country would have to be contacted—just as in the population
census every 10 years. This procedure would cost way too
much and take far too long to produce the data.
In addition, people would soon grow tired of having a census
taker contact them every month, year after year, to ask about
job-related activities.
Relationship Definitions
1. People in a relationship are dating.
2. People who are not in a relationship, looking for a
relationship, and available for a relationship are looking.
3. The dating pool is made up of the dating and the
looking.
4. People who are neither dating nor looking are not in the
dating pool.
Unemployment Definitions
1. People with jobs are employed.
2. People who are
2.1 jobless
2.2 looking for a job
2.3 available for work
are unemployed.
3. The labor force is made up of the employed and the
unemployed.
4. People who are neither employed nor unemployed are not
in the labor force.
Scenario
Elena reported to the interviewer that last week she worked 40
hours as a sales manager for a beverage company.
Scenario
Elena reported to the interviewer that last week she worked 40
hours as a sales manager for a beverage company.
Classification
Elena is employed.
Elena is in the Labor Force.
Scenario
Steve lost his job when the local plant of an aircraft
manufacturing company closed down. Since then, he has been
contacting other businesses in town trying to find a job.
Scenario
Steve lost his job when the local plant of an aircraft
manufacturing company closed down. Since then, he has been
contacting other businesses in town trying to find a job.
Classification
Steve is unemployed. Steve is in the Labor Force.
Useful measure of unemployment
1. The national unemployment rate. Perhaps the most
widely known labor market indicator, this statistic reflects
the number of unemployed people as a percentage of the
labor force.
UR = 100% ×
Unemployed
Labor Force
Why would UR increase or decrease?
Civilian Unemployment Rate
11
10
9
Percent
8
7
6
5
4
3
2
1950
1960
Shaded areas indicate U.S. recessions
1970
1980
1990
Source: U.S. Bureau of Labor Statistics
2000
2010
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Unemployment Rate: College Graduates: Bachelor’s Degree and Higher, 25 years and over
Unemployment Rate: High School Graduates, No College, 25 years and over
Unemployment Rate: Less than a High School Diploma, 25 years and over
17.5
15.0
Percent
12.5
10.0
7.5
5.0
2.5
0.0
1995
Shaded areas indicate U.S. recessions
2000
2005
Source: U.S. Bureau of Labor Statistics
2010
2015
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Unemployment Rate in West Virginia
Unemployment Rate in Pennsylvania
20.0
17.5
Percent
15.0
12.5
10.0
7.5
5.0
2.5
1980
1985
Shaded areas indicate U.S. recessions
1990
1995
2000
Source: U.S. Bureau of Labor Statistics
2005
2010
2015
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Scenario
Adam sold his one year ago. Since then, he has been hiking
the Pacific Trail.
Scenario
Adam sold his one year ago. Since then, he has been hiking
the Pacific Trail.
Classification
Adam is neither employed nor unemployed.
Adam is not in the labor force.
1. The labor force participation rate. This measure is the
number of people in the labor force as a percentage of
the civilian noninstitutional population 16 years old and
over. In other words, it is the percentage of the
population that is either working or actively seeking work.
LFPR = 100% ×
Labor Force
Population
Why would LFPR increase or decrease?
Civilian Labor Force Participation Rate
68
67
66
65
Percent
64
63
62
61
60
59
58
1950
1960
Shaded areas indicate U.S. recessions
1970
1980
1990
Source: U.S. Bureau of Labor Statistics
2000
2010
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Civilian Labor Force Participation Rate: Bachelor’s Degree and Higher, 25 years and over
Labor Force Participation Rate: High School Graduates, No College, 25 years and over
Labor Force Participation Rate: Less than a High School Diploma, 25 years and over
90
80
Percent
70
60
50
40
30
1994
1996
1998
Shaded areas indicate U.S. recessions
2000
2002
2004
2006
2008
Source: U.S. Bureau of Labor Statistics
2010
2012
2014
2016
2018
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Civilian Labor Force Participation Rate: Women
Civilian Labor Force Participation Rate: Men
90
80
Percent
70
60
50
40
30
1950
1960
Shaded areas indicate U.S. recessions
1970
1980
1990
Source: U.S. Bureau of Labor Statistics
2000
2010
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1. The employment-population ratio. This measure is the
number of employed as a percentage of the civilian
noninstitutional population 16 years old and over. In
other words, it is the percentage of the population that is
currently working.
EPR = 100% ×
Employed
Population
Why would EPR increase or decrease?
Civilian Employment-Population Ratio
65
64
63
62
Percent
61
60
59
58
57
56
55
54
1950
1960
Shaded areas indicate U.S. recessions
1970
1980
1990
Source: U.S. Bureau of Labor Statistics
2000
2010
myf.red/g/l7iD
Who is Considered Employed?
Who is Considered Employed?
People are considered employed if they did any work at all for
pay or profit during the survey reference week.
1. Part-time work
2. Temporary work
3. Regular, full-time work
Who is Considered Employed?
Scenario
Linda is a stay-at-home mother. Last week, she was occupied
with her normal household activities. She neither held a job
nor looked for a job. Her 80-year-old father who lives with her
has not worked or looked for work because of a disability.
Who is Considered Employed?
Scenario
Linda is a stay-at-home mother. Last week, she was occupied
with her normal household activities. She neither held a job
nor looked for a job. Her 80-year-old father who lives with her
has not worked or looked for work because of a disability.
Classification
Linda and her father are not in the labor force.
Who is Considered Employed?
Individuals also are counted as employed if they have a job at
which they did not work during the survey week, whether they
were paid or not, because they were:
1. On vacation
2. Ill
3. Experiencing child care problems
4. On maternity or paternity leave
5. Taking care of some other family or personal obligation
6. Involved in a labor dispute
7. Prevented from working by bad weather
Who is Considered Employed?
Not all of the wide range of job situations in the American
economy fit neatly into a given category.
An unpaid family worker is any person who worked without
pay for 15 hours or more per week in a business or farm
operated by a family member with whom they live.
Unpaid family workers comprise a small proportion of total
employment. Most of the employed are either wage and salary
workers (paid employees) or self-employed (working in their
own business, profession, or farm).
Who is Considered Employed?
Scenario
Garrett is 16 years old, and he has no job from which he
receives any pay or profit. However, Garrett does help with the
regular chores around his parents’ farm and spends about 20
hours each week doing so.
Who is Considered Employed?
Scenario
Garrett is 16 years old, and he has no job from which he
receives any pay or profit. However, Garrett does help with the
regular chores around his parents’ farm and spends about 20
hours each week doing so.
Classification
Garrett is employed.
Who is Considered Employed?
Scenario
Lisa spends most of her time taking care of her home and
children, but she helps in her husband’s computer software
business all day Friday and Saturday.
Who is Considered Employed?
Scenario
Lisa spends most of her time taking care of her home and
children, but she helps in her husband’s computer software
business all day Friday and Saturday.
Classification
Linda is employed.
Who is Considered Unemployed?
Who is Considered Unemployed?
People are considered unemployed if they
1. Do not have a job
2. Have actively looked for a job in the prior 4 weeks
3. Are available to work
Workers expecting to be recalled from temporary layoff are
counted as unemployed.
Passive methods of job search include reading about job
openings that are posted in newspapers or on the Internet.
Who is Considered Unemployed?
The total unemployment figures cover more than the number
of people who have lost jobs. They include
1. People who have quit their jobs to look for other
employment
2. Individuals looking for their first job
3. Workers whose temporary jobs have ended
4. Experienced workers looking for jobs after an absence
from the labor force (for example, stay-at-home parents
who return to the labor force after their children have
entered school).
Who is Considered Unemployed?
Actively looking for work includes
1. Contacting
1.1
1.2
1.3
1.4
2.
3.
4.
5.
An employer directly or having a job interview
A public or private employment agency
Friends or relatives
A school or university employment center
Submitting resumes or filling out applications
Placing or answering job advertisements
Checking union or professional registers
Some other means of active job search
Who is Considered Unemployed?
Scenario
Yvonne reported that 2 weeks ago she applied for jobs at a
bank and at a mortgage lending company. She currently is
waiting to hear back from both businesses.
Who is Considered Unemployed?
Scenario
Yvonne reported that 2 weeks ago she applied for jobs at a
bank and at a mortgage lending company. She currently is
waiting to hear back from both businesses.
Classification
Yvonne is unemployed because she made a specific effort to
find a job within the prior 4 weeks and is presently available
for work.
Who is Considered Unemployed?
Scenario
Ms. Jenkins tells the interviewer that her teenage daughter,
Katherine Marie, was thinking about looking for work in the
prior 4 weeks but knows of no specific efforts she has made.
Who is Considered Unemployed?
Scenario
Ms. Jenkins tells the interviewer that her teenage daughter,
Katherine Marie, was thinking about looking for work in the
prior 4 weeks but knows of no specific efforts she has made.
Classification
Katherine Marie does not meet the activity test for
unemployment and is, therefore, counted as not in the labor
force.
Who is Considered Unemployed?
Scenario
John has been checking for openings at a local warehouse
store for each of the past 3 weeks, but last week he had the flu
and was unavailable for work because of it.
Who is Considered Unemployed?
Scenario
John has been checking for openings at a local warehouse
store for each of the past 3 weeks, but last week he had the flu
and was unavailable for work because of it.
Classification
John is counted as unemployed because he took steps to look
for work and would have been available for work during the
survey reference week, except for his temporary illness.
Who is Considered Unemployed?
Scenario
Marcus was laid off from the local plant of a major automaker
when the firm began retooling to produce a new model car.
Marcus knows he will be called back to work as soon as the
model changeover is completed, and he also knows it is unlikely
that he would be able to find a job for the period he is laid off;
so, although he is available to work, he is not seeking a job.
Who is Considered Unemployed?
Scenario
Marcus was laid off from the local plant of a major automaker
when the firm began retooling to produce a new model car.
Marcus knows he will be called back to work as soon as the
model changeover is completed, and he also knows it is unlikely
that he would be able to find a job for the period he is laid off;
so, although he is available to work, he is not seeking a job.
Classification
Marcus is unemployed because he is waiting to be recalled
from layoff.
Who is Considered Unemployed?
Scenario
Julia told the interviewer that she has submitted applications
with three companies for summer jobs. However, it is only
April and she doesn’t wish to start work until at least June 15,
because she is attending school. Although she has taken
specific steps to find a job,
Who is Considered Unemployed?
Scenario
Julia told the interviewer that she has submitted applications
with three companies for summer jobs. However, it is only
April and she doesn’t wish to start work until at least June 15,
because she is attending school. Although she has taken
specific steps to find a job,
Classification
Julia is classified as not in the labor force because she is not
currently available for work. (She could not have started a job
if one had been offered.) Students are treated the same as
other persons; that is, they are classified as employed or
unemployed if they meet the criteria, whether they are in
school on a full- or part-time basis.
Who is not in the Labor Force?
Who is not in the Labor Force?
Many who are not in the labor force are going to school, have
family obligations, or are retired. Since the mid 1990s,
typically fewer than 1 in 10 people not in the labor force
reported that they want a job.
A series of questions is asked each month of persons not in the
labor force to obtain information about their desire for work
1. Do you currently want a job, either full or part time?
2. What is the main reason you were not looking for work
during the last 4 weeks?
3. Did you look for work at any time during the last 12
months?
4. Last week, could you have started a job if one had been
offered?
Who is not in the Labor Force?
These questions form the basis for estimating the number of
people who are not in the labor force but who are considered
to be marginally attached to the labor force. Marginally
attached are individuals who
1. Currently want a job
2. Have looked for work in the last 12 months (or since they
last worked if they worked within the last 12 months)
3. Are available for work.
Who is not in the Labor Force?
Discouraged workers are a subset of the marginally
attached. Discouraged workers report they are not currently
looking for work because
1. They believe no job is available to them in their line of
work or area.
2. They had previously been unable to find work.
3. They lack the necessary schooling, training, skills, or
experience.
4. Employers think they are too young or too old, or
5. They face some other type of discrimination.
Who is not in the Labor Force?
Because of the wide variety of employment arrangements and
job seeking methods found in the U.S. labor market, the
definitions of employment and unemployment must be specific
and objective to ensure uniformity of reporting at any given
time and over any period of time.
When all of the details are considered, the definitions may
seem rather complicated. The basic concepts, however, remain
little changed since the inception of the CPS in 1940
1. People with jobs are employed
2. People who do not have jobs and are looking for jobs are
unemployed
3. People who meet neither labor market test are not in the
labor force.
Other Measurements?
U1-U6
BLS Unemployment Categories
U1 Persons unemployed 15 weeks or longer, as a percent of
the civilian labor force
U2 Job losers and persons who completed temporary jobs, as
a percent of the civilian labor force
U3 Total unemployed, as a percent of the civilian labor force
(official unemployment rate)
U4 Total unemployed plus discouraged workers, as a percent
of the civilian labor force plus discouraged workers
U5 Total unemployed, plus discouraged workers, plus all
other persons marginally attached to the labor force, as a
percent of the civilian labor force plus all persons
marginally attached to the labor force
U6 Total unemployed, plus all persons marginally attached to
the labor force, plus total employed part time for
economic reasons, as a percent of the civilian labor force
Persons Unemployed 15 weeks or longer, as a percent of the civilian labor force
Unemployment Rate: Job Losers
Civilian Unemployment Rate
Special Unemployment Rate: Unemployed and Discouraged Workers
Special Unemployment Rate: Unemployed and Marginally Attached Workers
Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons
17.5
15.0
Percent
12.5
10.0
7.5
5.0
2.5
0.0
1950
1960
Shaded areas indicate U.S. recessions
1970
1980
1990
Source: U.S. Bureau of Labor Statistics
2000
2010
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Unemployment Insurance
Unemployment insurance (UI) programs are administered at
the state level and provide assistance to jobless people who are
looking for work.
Workers who lose their jobs may file initial claims to
determine if they are eligible for UI assistance.
Claimants who meet the eligibility requirements must file
continuing claims for each week that they seek benefits.
Over the past decade, only about one-third of the total
unemployed, on average, received regular UI benefits
Unemployment Insurance
UI measures exclude several groups
1. Self-employed workers, unpaid family workers, workers in
certain not-for-profit organizations, and several other
small (primarily seasonal)
2. Unemployed workers who have exhausted their benefits.
3. Unemployed workers who have not yet earned benefit
rights (such as new entrants or reentrants to the labor
force).
4. Disqualified workers whose unemployment is considered
to have resulted from their own actions rather than from
economic conditions; for example, a worker fired for
misconduct on the job.
5. Otherwise eligible unemployed persons who do not file for
benefits.
Initial Claims
700,000
600,000
Number
500,000
400,000
300,000
200,000
100,000
1970
1980
1990
2000
Shaded areas indicate U.S. recessions Source: U.S. Employment and Training Administration
2010
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Initial Claims
Continued Claims (Insured Unemployment)
7M
6M
Number
5M
4M
3M
2M
1M
0
1970
1975
1980
1985
1990
1995
2000
Shaded areas indicate U.S. recessions Source: U.S. Employment and Training Administration
2005
2010
2015
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Seasonality
Unemployment is higher in January and February, when it is
cold in many parts of the country and work in agriculture,
construction, and other seasonal industries is curtailed.
Both employment and unemployment rise every June, when
students enter the labor force in search of summer jobs or
after graduating.
Hiring (and layoff) patterns that accompany regular events
such as the winter holiday season and the summer vacation
season are also important.
Economists use the term seasonal unemployment when
referring to these types of unemployment.
Peaks in winter
Unemployment Rate in Iowa; Seasonally …
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