ECONOMICS TOPIC 7 LESSON 4

ECONOMICS TOPIC 7 LESSON 4

UNEMPLOYMENT

ESSENTIAL QUESTION

Why should we care how the economy is doing?

OBJECTIVES

Interpret economic data relating to the unemployment rate.

Differentiate between frictional, seasonal, structural, and cyclical unemployment.

OBJECTIVES

Explain why full employment does not mean that every worker is employed.

Explain the costs and benefits of U.S. economic policies related to the goal of full employment.

Types of Unemployment

Economists look at four categories of unemployment: frictional, seasonal, structural, and cyclical. Sometimes, factors outside the economy can cause unemployment. 

Types of Unemployment

Frictional Unemployment

Unemployment always exists, even in a booming economy. Frictional unemployment occurs when people take time to find a job.

Types of Unemployment

 Structural unemployment occurs when workers’ skills do not match those needed for the jobs that are now available.

There are five major causes of structural unemployment.

• The development of new technology

• The discovery of new resources

• Changes in consumer demand 

• Globalization

• Lack of education

Open Ended

Analyze Charts What is the lowest level of education at which people have an unemployment rate lower than the average for all workers?

Types of Unemployment

  seasonal unemployment occurs when industries slow or shut down for a season or make seasonal shifts in their production schedules. Seasonal unemployment can also occur as a result of harvest schedules or vacations.

Types of Unemployment

Cyclical Unemployment

Unemployment that rises during economic downturns and falls when the economy improves is called cyclical unemployment.

Open Ended

Analyze Charts How long were the largest proportion of unemployed people out of work in this time period?

Circumstances Outside the Economy

Sometimes events outside the economy can cause unemployment. A great example was the Covid virus that shut down the economy due to lock downs.

Multiple Choice

Define Unemployment that occurs when workers’ skills do not match the jobs that are available is called

• frictional unemployment.

• structural unemployment.

• seasonal unemployment.

• cyclical unemployment.

The Unemployment Rate

The unemployment rate, or the percentage of the nation’s labor force that is unemployed.

Interpreting the Unemployment Rate

The labor force is composed of civilians age 16 and older who have a job or are actively looking for a job. To determine the unemployment rate, add up the number of employed and unemployed people. That figure equals the total labor force. Then they divide the number of unemployed people by the total labor force and multiply by 100. This is the percentage of unemployed.

Adjusting the Unemployment Rate

When you see the unemployment rate for a particular month, it has usually been “seasonally adjusted.” This means that the rate has been increased or decreased to take into account the level of seasonal unemployment.

Multiple Choice

Analyze Data How do we figure out the unemployment rate?

• Divide the total population by 50, and then multiply by the total labor force.

• Subtract the number of people who are unemployed from the number of people who are employed.

• Add the percentage of seasonal workers to the total population, and then divide by 100.

• Divide the number of people who are unemployed by the total labor force, and then multiply by 100.

The Goal of Full Employment

full employment is the level of employment reached when no cyclical unemployment exists.

Underemployment

Some people working at low-skill, low-wage jobs may be highly skilled or educated in a field with few opportunities. They are underemployed, that is, working at a job for which they are overqualified, or working part time when they desire full-time work.

Discouraged Workers

Some people, especially during a long recession, give up hope of finding work. These discouraged workers have stopped searching for employment and may rely on other family members or savings to support them.

Discouraged Workers

Some people, especially during a long recession, give up hope of finding work. These discouraged workers have stopped searching for employment and may rely on other family members or savings to support them.

Multiple Choice

Identify What will most likely still occur when the economy has achieved full employment?

• frictional, seasonal, and cyclical unemployment

• seasonal, structural, and cyclical unemployment

• frictional, seasonal, and structural unemployment

• frictional and structural but not cyclical unemployment

Open Ended

Why should we care how the economy is doing?