Difference between revisions of "Unemployment"

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'''Unemployment''' is when people are unable to find jobs at the prevailing wages for their skills and experience.  Economists refer to this as "involuntary unemployment."
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'''Unemployment''' is the state of being unemployed. The U.S. government classifies persons as "[[unemployed]]" if they do not have a job, but have actively looked for work in the prior 4 weeks, and are currently available for work. (The [[labor force]] is made up of the employed and the unemployed. The remainder—those who have no job and are not looking for one—are counted as "not in the labor force.") [http://www.bls.gov/cps/faq.htm#Ques5]
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"Involuntary unemployment" is when people are unable to find jobs at the prevailing wages for their skills and experience.  "Voluntary unemployment" is a normal process when people join the labor force (after leaving school, for example) or move to a new area.
  
[[Image:U-2009-2.jpg|thumb|275px|left]]
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Contrary to a campaign ad for Obama's reelection, "the Massachusetts unemployment rate fell steadily even as the working-age population rose when Romney was governor." (Source: a column in the liberal ''Boston Globe'' [http://bostonglobe.com/opinion/2012/07/10/mitt-romney-economic-record-massachusetts-outpaces-barack-obama-record/UXVVRMrD4Wf4dWdDb97mNI/story.html])
After reaching a low of 4.1% in October, 2006, the U.S. [[unemployment]] rate has been trending upward, reaching 8.5% in March 2009.  
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{{clear}}
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[[File:Recovery Summer Unemployment.JPG|450px|right|thumb|United States Unemployment after President Obama's [[American Recovery and Reinvestment Act of 2009|economic stimulus]] was passed. ]]
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After reaching a low of 4.1% in October, 2006, the U.S. unemployment rate has been moving upward, reaching 10.0% in January 2010. By May 2017, under the [[Trump Administration]], unemployment was back down to 4.4%, but wages remain stagnant.
  
Some people think that to get figures on unemployment the Government uses the number of persons filing claims for 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. So the Government conducts a monthly sample survey called the Current Population Survey (CPS) to measure the extent of unemployment in the country. The CPS has been conducted in the United States every month since 1940 when it began as a Work Projects Administration project. [http://www.bls.gov/cps/cps_htgm.htm]  
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Weekly estimates of unemployment use the number of persons filing new claims for unemployment insurance (UI) benefits. Much more accurate data is based on large scale interview surveys, and is reported on the first Friday of the following month. Since 1940 the monthly Current Population Survey (CPS) has been used.<ref>See [http://www.bls.gov/cps/cps_htgm.htm Bureau of Labor Statistics]</ref>
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==Causes==
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Three types of unemployment can be distinguished by their causes. '''Frictional''' unemployment is the normal churning of the job market; people enter the labor force from school or home, and spend time looking for the best job. Most frictional unemployment is voluntary and is desirable to keep the economy working. '''Seasonal''' unemployment refers to jobs that operate at certain seasons, such as construction and tourism industries. Because teachers are paid during summer vacation, they are not counted as unemployed  in the summertime. The '''"normal unemployment rate'''" (frictional plus seasonal) is about 3% to 4%.  '''Unemployment insurance''' is designed to help people smooth over their financial needs during frictional and seasonal unemployment.
  
In some fields (such as technology) the unemployment rate for persons over 45 years old can be as high as 80%.
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'''Structural''' unemployment is much more serious. It means a mis-match of jobs and workers. For example, there may be jobs in the cities and unemployment in mining or logging areas, but people are reluctant to move because of family ties.  There may be jobs available in some fields but people who are unemployed lack the necessary skills. This is a structural problem solved by migration, job training and education.
  
Three types of unemployment can be distinguished by their causes. '''Frictional''' unemployment is the normal churning of the job market; people enter the labor force from school or home, and spend time looking for the best job. '''Seasonal''' unemployment refers to jobs that operate at certain seasons, especially in the construction and tourism industries. Teachers in the summertime are not counted as unemployed. The '''"normal unemployment rate'''" (frictional plus seasonal) is about 3% to 4%. '''[[Unemployment insurance]]''' is designed to help people face frictional and seasonal unemployment.  It  permits them to keep their skills rather than take a low-skilled job.
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Finally—and most serious—is '''cyclic unemployment''' (as in [[Recession of 2008|2008-2009]] and the [[Great Depression]]), when the whole economy is sagging and businesses lay off tens of thousands of workers every day. Some new jobs are created every month but they are overwhelmed by the jobs that are lost.  In February 2009, the U.S. economy lost 651,000 jobs net (that is, jobs that disappeared outnumbered jobs that were created by 651,000). Through April 30, 2009, about 5.7 million jobs were lost in 2008-9.
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[[File:Un-0409.jpg|thumb|250px|update for April 2009]] [[Image:Job-loss-09.jpg|thumb|250px|US job losses January 1-March 31, 2009]] 
  
'''Structural''' unemployment means a mis-match of jobs and workers. For example, there may be jobs in the cities and unemployment in mining or logging areas, but people are reluctant to move because of family ties.   There may be jobs available in some fields but people who are unemployed lack the necessary skills. This is a structural problem solved by migration, job training and education. Some structural unemployment is caused by policies such as the [[minimum wage]].
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In times of recession people are unemployed for much longer periods. In July 2009, 5 million people (one out of three unemployed) had been out of work for six months or longer.<ref>Bureau of Labor Statistics, "The Employment Situation -- July 2009" [http://www.bls.gov/news.release/empsit.nr0.htm online]</ref>
  
Finally--and most serious--is '''cyclic unemployment''' (as in [[Recession of 2008|2008-2009]] and the [[Great Depression]]), when the whole economy is sagging and businesses lay off tens of thousands of workers every day. A few new jobs are created every month but they are overwhelmed by the jobs that are lost.  In February 2009, the U.S. economy lost 651,000 jobs net (that is, jobs that disappeared outnumbered jobs that were created by 641,000). Over 4.4 million jobs were lost in 2008-9.
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==Natural rate==
[[Image:Jobs09q1.jpg|thumb|250px]] [[Image:Job-loss-09.jpg|thumb|250px|US job losses January 1-March 31, 2009]]
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Conservative [[economist]] [[Milton Friedman]] in 1968 introduced the concept of the "natural rate of unemployment," which is the rate generated by the economy which does not cause inflation or deflation.
At election time, unemployment is often portrayed as a great evil, but [[Milton Friedman]] said,
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:All of the progress that the US has made over the last couple of centuries has come from unemployment. It has come from figuring out how to produce more goods with fewer workers, thereby releasing labor to be more productive in other areas. It has never come about through permanent unemployment, but temporary unemployment, in the process of shifting people from one area to another. [http://www.rightwingnews.com/interviews/friedman.php]
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Friedman notes:
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:All of the progress that the US has made over the last couple of centuries has come from unemployment. It has come from figuring out how to produce more goods with fewer workers, thereby releasing labor to be more productive in other areas. It has never come about through permanent unemployment, but temporary unemployment, in the process of shifting people from one area to another.<ref>See [http://www.rightwingnews.com/interviews/friedman.php interview]</ref>
  
==see also==
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==See also==
*[[Cyclical unemployment]]
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[[File:Employed.jpg|thumb|300px]]
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* [[Cyclical unemployment]]
 
* [[Great Depression]]
 
* [[Great Depression]]
 
* [[Recession of 2008]]
 
* [[Recession of 2008]]
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* [[Jobless recovery]]
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* [[Phillips curve]], for Keynesian model
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* [[Barack Obama and United States Unemployment]]
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* [[:Category:Survivalism|Economic preparedness]]
  
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==Further reading==
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* Blanchard, Olivier J. "European Unemployment: The Evolution of Facts and Ideas," ''Economic Policy'', Vol. 21, No. 45, pp.&nbsp;5–59, January 2006
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* Gallaway, Lowell, Richard Vedder, Martin Bronfenbrenner. ''Out of Work: Unemployment and Government in Twentieth-Century America'' 336 pp [http://www.questia.com/library/book/out-of-work-unemployment-and-government-in-twentieth-century-america-by-lowell-gallaway-richard-vedder-martin-bronfenbrenner.jsp online edition], by conservative economists
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* Garraty John A. ''Unemployment in History: Economic Thought and Public Policy'' (1978)
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* Jensen, Richard J. "The Causes and Cures of Unemployment in the Great Depression," ''Journal of Interdisciplinary History'' 19 (1989) 553-83. [http://www.jstor.org/pss/203954 online at JSTOR]
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* Layard, Richard, etr al. ''Unemployment: macroeconomic performance and the labour market‎'' (2005)  623 pages [http://books.google.com/books?id=ge2kxorhALEC&dq=intitle:unemployment&lr=&as_drrb_is=b&as_minm_is=0&as_miny_is=1990&as_maxm_is=0&as_maxy_is=2009&num=30&as_brr=0 excerpt and text search]
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* Marshalle,  Mary I. ''Economics of unemployment‎'' (2006) 230 pages [http://books.google.com/books?id=6UcdQsU97f4C&dq=intitle:unemployment&lr=&as_drrb_is=b&as_minm_is=0&as_miny_is=2004&as_maxm_is=0&as_maxy_is=2009&num=30&as_brr=0 excerpt and text search]
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==References==
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<references/>
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{{Economic preparedness topics}}
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[[Category:Economic Preparedness]]
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[[Category:Threats]]
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[[Category:Survivalism]]
 
[[Category:Economics]]
 
[[Category:Economics]]
[[Category:Obama Administration]]
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[[Category:Great Depression]]
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[[Category:Employment]]

Latest revision as of 20:50, 6 May 2017

Unemployment office.jpg

Unemployment is the state of being unemployed. The U.S. government classifies persons as "unemployed" if they do not have a job, but have actively looked for work in the prior 4 weeks, and are currently available for work. (The labor force is made up of the employed and the unemployed. The remainder—those who have no job and are not looking for one—are counted as "not in the labor force.") [1] "Involuntary unemployment" is when people are unable to find jobs at the prevailing wages for their skills and experience. "Voluntary unemployment" is a normal process when people join the labor force (after leaving school, for example) or move to a new area.

Contrary to a campaign ad for Obama's reelection, "the Massachusetts unemployment rate fell steadily even as the working-age population rose when Romney was governor." (Source: a column in the liberal Boston Globe [2])


United States Unemployment after President Obama's economic stimulus was passed.

After reaching a low of 4.1% in October, 2006, the U.S. unemployment rate has been moving upward, reaching 10.0% in January 2010. By May 2017, under the Trump Administration, unemployment was back down to 4.4%, but wages remain stagnant.

Weekly estimates of unemployment use the number of persons filing new claims for unemployment insurance (UI) benefits. Much more accurate data is based on large scale interview surveys, and is reported on the first Friday of the following month. Since 1940 the monthly Current Population Survey (CPS) has been used.[1]

Causes

Three types of unemployment can be distinguished by their causes. Frictional unemployment is the normal churning of the job market; people enter the labor force from school or home, and spend time looking for the best job. Most frictional unemployment is voluntary and is desirable to keep the economy working. Seasonal unemployment refers to jobs that operate at certain seasons, such as construction and tourism industries. Because teachers are paid during summer vacation, they are not counted as unemployed in the summertime. The "normal unemployment rate" (frictional plus seasonal) is about 3% to 4%. Unemployment insurance is designed to help people smooth over their financial needs during frictional and seasonal unemployment.

Structural unemployment is much more serious. It means a mis-match of jobs and workers. For example, there may be jobs in the cities and unemployment in mining or logging areas, but people are reluctant to move because of family ties. There may be jobs available in some fields but people who are unemployed lack the necessary skills. This is a structural problem solved by migration, job training and education.

Finally—and most serious—is cyclic unemployment (as in 2008-2009 and the Great Depression), when the whole economy is sagging and businesses lay off tens of thousands of workers every day. Some new jobs are created every month but they are overwhelmed by the jobs that are lost. In February 2009, the U.S. economy lost 651,000 jobs net (that is, jobs that disappeared outnumbered jobs that were created by 651,000). Through April 30, 2009, about 5.7 million jobs were lost in 2008-9.

update for April 2009
US job losses January 1-March 31, 2009

In times of recession people are unemployed for much longer periods. In July 2009, 5 million people (one out of three unemployed) had been out of work for six months or longer.[2]

Natural rate

Conservative economist Milton Friedman in 1968 introduced the concept of the "natural rate of unemployment," which is the rate generated by the economy which does not cause inflation or deflation.

Friedman notes:

All of the progress that the US has made over the last couple of centuries has come from unemployment. It has come from figuring out how to produce more goods with fewer workers, thereby releasing labor to be more productive in other areas. It has never come about through permanent unemployment, but temporary unemployment, in the process of shifting people from one area to another.[3]

See also

Employed.jpg

Further reading

  • Blanchard, Olivier J. "European Unemployment: The Evolution of Facts and Ideas," Economic Policy, Vol. 21, No. 45, pp. 5–59, January 2006
  • Gallaway, Lowell, Richard Vedder, Martin Bronfenbrenner. Out of Work: Unemployment and Government in Twentieth-Century America 336 pp online edition, by conservative economists
  • Garraty John A. Unemployment in History: Economic Thought and Public Policy (1978)
  • Jensen, Richard J. "The Causes and Cures of Unemployment in the Great Depression," Journal of Interdisciplinary History 19 (1989) 553-83. online at JSTOR
  • Layard, Richard, etr al. Unemployment: macroeconomic performance and the labour market‎ (2005) 623 pages excerpt and text search
  • Marshalle, Mary I. Economics of unemployment‎ (2006) 230 pages excerpt and text search

References

  1. See Bureau of Labor Statistics
  2. Bureau of Labor Statistics, "The Employment Situation -- July 2009" online
  3. See interview