United States Business



U.S. Business

    Unemployment


    Unemployment

    Unemployment is measured as the percentage of the LABOR FORCE not currently working. Labor force is defined as people working plus people actively seeking work. “Actively seeking work” usually means people are currently registered with their state EMPLOYMENT service. The U.S. CENSUS BUREAU estimates unemployment (expressed as a percentage of the labor force not working) by sampling U.S. households regarding their employment status. By defining the labor force as those people working and actively seeking work, unemployment statistics do not include discouraged workers (people no longer actively looking for work), and the statistics do not distinguish between people working full-time and those working parttime. Of course, unemployment statistics may include people collecting unemployment benefits but working “off the books.” In the United States, unemployment benefits last only for 26 weeks, considerably shorter than in most European countries, which minimizes the problem of people collecting benefits while in fact working. Unemployment rates in the United States vary by age, gender, and race. The highest unemployment rates are among young female minorities, while the lowest unemployment rates are among older white males. Economists distinguish among four types of unemployment: seasonal, structural, frictional, and cyclical. Seasonal unemployment is, as the term suggests, unemployment associated with seasonal conditions. Agricultural and construction workers become seasonally unemployed, while retail employment jumps during the holiday season. Unemployment rates are adjusted for seasonal variations. Structural unemployment refers to people who are out of work because there is no longer demand for their skills. With today’s rapid increases in the use of technology, people who worked at repetitive tasks or efforts that involve counting are often being replaced by technology. For example, where one used to reach an operator when calling for directory assistance, nowadays most calls are answered by a computer-based voice recognition system. Telephone directory assistance people are thus becoming structurally unemployed. Similarly, 100 years ago there were thousands of coopers, highly skilled craftsmen who made wooden containers. With the invention of cardboard, aluminum, and plastic PACKAGING, today the only coopers still employed are demonstrators in antique museums. Structural unemployment is a serious economic problem. People who lose their jobs because there is no longer a need for their skills either become retrained and return to the workforce, retire, or join the WELFARE rolls when their unemployment benefits end. Training programs and government incentives to business to hire and train structurally unemployed people provide long-term benefits to both the individuals and society. Frictional unemployment refers to people who choose to leave their jobs in search of other opportunities. Sometimes referred to as turnover unemployment, frictional unemployment is a normal and healthy part of an economy. Generally people are paid based on their productivity. When workers seek employment where they can more fully utilize their skills, they are more productive. An economic system that does not provide opportunities for people to improve their opportunities discourages productivity and collectively impairs ECONOMIC GROWTH. Cyclical unemployment is associated with BUSINESS CYCLES. Though the U.S. economy consistently grew throughout the 1990s, historically economies go through periods of expansion and contraction. Unemployment associated with contractions in the economy is cyclical unemployment. Full employment is defined as the absence of cyclical unemployment; this means there is still frictional, seasonal, and structural unemployment. Defining full employment has significant implications. The goal of macroeconomic policy is an economy operating at its potential level of output, which entails full utilization of its RESOURCES, including labor. During periods of economic expansion, an unemployment rate that is too low will lead to pressure to increase wages, causing INFLATION. Throughout the 1990s, economists in the United States debated whether 4 percent unemployment would lead to inflation.
    Related links for Unemployment:

    Related links:
  • Labor force (workforce)
  • Economic conditions
  • Bureau of Labor Statistics
  • Automatic stabilizers (built-in stabilizers)
  • Transfer payments
  • Empowerment zones, enterprise zones
  • Trade-adjustment assistance


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