Unemployment

1
Unemployment

• By Jay, John, Todd, Warren, Sam, Andrew

2
How Is Unemployment Measured?

• Labor Force Participation Employed Unemployed
• Employed have a job, 16 years or older, not in
  institution, not on active military duty
• Unemployed Dont have a job, have been actively
  looking for a job in the last 4 weeks, and
  currently are available for work

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Not In The Labor Force

• Under the age of 16
• In an institution
• Active military duty
• Marginally Attached
• Discouraged Workers
• Many Students Dont have jobs and arent
  looking for them

4
Unemployment

• Unemployment rate total of unemployed divided
  by the total in labor force
• Currently of Unemployed 6.7 million
• Unemployment Rate 4.4

5
How Is Unemployment Measured?

• Measured once a month-during the week the 12th
  day of month occurs
• Measured by Bureau of the Census for the Bureau
  of Labor Statistics
• Current Population Survey (CPS) 1940
• 60,000 households in the survey
• In survey for 8 months

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How Is Unemployment Measured?

• 105,480,101 down to 3,141 counties
• 3,141 counties to 1,973 geographic regions
• 1,973 geographic regions to 754 regions
• Each of 754 regions divided into 300 enumeration
  districts
• Each enumeration made up of clusters-4 households
• Clusters statistically selected for survey

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How Is Unemployment Measured?

• ¼ of the households are changed every month
• 4 months on, 8 month break, final 4 months
• 1,500 highly trained employees
• Classify each person 16 or over and weight the
  numbers
• 90 confidence within 230,000

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Different Situations for Employment

• Were away from work during survey week for
  legitimate reasons
• with a job but not at work
• Work 15 hours or more in family business
• unpaid family workers

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Different Situations for Unemployment

• Passive job search methods do not count as
  looking for work
• Expecting to be recalled for layoff
• Unemployed regardless of whether they are looking
  for job or not

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Seasonal Fluctuations

• Unemployment higher in January and February
• Tends to be higher during summer months
• Seasonal Adjustment

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Gender, Race, Age Unemployment Statistics
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Unemployment vs. Consumer Price Index
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Unemployment vs. Federal Funds Rate
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Recent FOMC Decisions

• From June 2004 to August 2006 the Federal Funds
  rate, which began at 1, was raised 25 basis
  points until it reached 5 ¼, where it has stayed
  to this day.
• During this same time, the unemployment rate has
  steadily decreased from 5.6 to its current rate
  of 4.4.
• The date shows an inverse relationship between
  the Unemployment and the Federal Funds Rate

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Policy Recommendations

• Since the Federal Funds Rate has leveled off and
  the Unemployment Rate has continued to steadily
  decrease, we recommend leaving the Federal Funds
  Rate at its current level at 5 ¼ unless the
  Unemployment Rate begins to rise. In this case,
  we suggest raising the Federal Funds Rate
  accordingly to try to stop the increase in the
  Unemployment Rate.

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Multiple Choice Question 1

• The unemployment rate is measured using the _____
  with a sample size of _____ .
• a. Current Employment Statistics Survey 60,000
• b. Current Employment Statistics Survey
  100,000
• c. Current Population Survey 100,000
• d. Current Population Survey 60,000
• Answer d

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Question 2

• 2. What is the current Unemployment Rate?
• a. 3.6
• b. 4.4
• c. 6.3
• d. 2.4
• e. None of the Above
• Answer b

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Question 3

• 3. Since June 2004, the Federal Funds Rate has
  steadily _____ while the Unemployment Rate has
  steadily _____.
• a. increased increased
• b. increased decreased
• c. decreased decreased
• d. decreased increased
• Answer b

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Question 4

• 4. You are categorized as unemployed if _____
• a. you are under the age of 16
• b. you are in the military
• c. you do not have a job, but currently are
  looking for one and are able to work
• d. All of the Above
• Answer c