Unemployment

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Unemployment
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Who is officially considered unemployed?
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You are still considered employed if

• You work part-time
• You work in your own business
• You work in a family business or on a family farm
  more than 15 hours a week
• You are absent from work due to illness or a
  strike
• You are working part-time while looking for a
  full-time job

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You are only considered unemployed if

• You do not work even part-time
• You are actively seeking a job and have applied
  for one within the last four weeks

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Disguised Unemployment

• Discouraged workers who no longer even look for
  work do NOT count in the unemployment rate. They
  are not even a part of the civilian labor force.
• Underemployed workers do NOT count because they
  are at least working part-time, even if they are
  seeking a full-time job. They are considered
  employed.

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Who is unemployed?

• A college student goes to a job fair to find her
  first post-graduate job.
• A stay-at-home mom volunteers her time at the
  local library three days a week.
• A UPS delivery person works part-time but would
  prefer to work full-time.
• A homeless man at the Faith Mission shelter in
  Columbus, Ohio, spends his days regaling friends
  with war stories from his youth and has not
  applied for a job in six months.
• An air force lieutenant is honorably discharged
  from service and wants to work as a political
  consultant in Washington, D.C.
• A convicted thief who is serving time at the
  medium security prison in Concord.
• A fourteen year old who would like to find a
  regular babysitting job.

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Unemployment Rate
number of persons unemployed number of persons in
the civilian labor force
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(No Transcript)
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What kind of unemployment?

• A Wisconsin construction worker cannot find work
  in the winter.
• A steelworker is laid off because of a long
  recession.
• A computer programmer quits her job in Chicago to
  look for a new job in San Diego.
• A high school dropout applies for several jobs
  but is told each time that he is not qualified.
• An unemployed college senior is looking for her
  first job.
• An unemployed auto worker has been replaced by a
  robot.

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Full Employment is NOT Zero Unemployment

• Some frictional unemployment is necessary because
  we still value our freedom of employment
• Some structural unemployment is inevitable as
  economies change and grow (their make-up, types
  of businesses, technology, geography)
• Some seasonal unemployment occurs naturally, such
  as in tourism or agriculture
• These create a natural rate of unemployment,
  which is around 5 to 6. This is considered to
  be full employment.

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Disequilibrium Unemployment

• Unemployment over and above the natural rate
• By definition this includes cyclical
• Caused by excessive or insufficient demand in the
  overall economy

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What are the costs of unemployment?

• Loss of self-esteem
• Loss of income
• Loss of economic output
• Multiplies throughout the economy
• Tax revenues fall