Econ 201: Week 13
Labor Force Statistics
• Created by the BLS (Bureau of Labor Statistics) in the U.S. Department of Labor • Based on regular survey submitted from 60,000 households
• Based on “adult population”- 16 years and older
o Disincluding: military, institutionalized, incarcerated, minors
Population divided into 3 groups: by BLS
1. Employed- Paid employer, self-employed, and unpaid workers in a family business
2. Unemployed- Non-working people that have been looking for work the past 4 weeks
3. Not in the Labor Force- Everyone else (stay at home moms, full time students, retires)
• All people capable of working (whether currently working or not) o Working: Employed
o Actively looking for work: Unemployed
Civilian Adult Population
Labor Force Non-Labor Force Employed Unemployed
If you want to learn more check out What are the primary bond types?
• Unemployment Rate
o Percentage of unemployment in the Labor Force
o Also called U-Rate
▪ = 100 * (# unemployed/ labor force)
• Labor Force Participation Rate
o Percentage of the Adult Population in the Labor Force
▪ = 100 * (labor force/ adult population
• Categorized by its characteristics and duration
o Not always the same
o Basic truth: there’s always some U
• The natural rate of U
o The normal rate of unemployment around the actual unemployment rate fluctuates
▪ Made up of frictional and structural unemployment
▪ The long run “average”
• Unemployment Insurance:
o Government program that provides funding to unemployed workers ▪ Benefits: Reduce income uncertainty; increases search time; increases possibility of job that is a good fit, this increasing productivity If you want to learn more check out What is the deutsch word of to play the guitar?
▪ Costs: Increases frictional unemployment
Explaining Natural Rates of U
• Frictional Unemployment: If you want to learn more check out What is an area between supply curve and price curve?
o When workers are searching for a job that best suits their skills/taste o Short-term in most cases We also discuss several other topics like What is the study of systems in state of constant motion at rest and constant velocity?
• Structural Unemployment:
o The skills of the worker aren’t “valued” by the market
o Occurs when there aren’t enough jobs in the market
▪ Can be long-term
▪ Can result from “sticky wages”
Explaining Structural U: Policy
Occurs when wages are above equilibrium
1. Min Wage Laws: Price floor (mostly effects teen employment) 2. Unions: Worker association; collective bargaining w/ employers over wages, benefits, and working conditions 3. Efficiency Wages: Firms voluntarily pay higher than equilibrium wages to boost worker productivity If you want to learn more check out Who are the three warrior brothers represent roma side of the war?
• The deviation of unemployment from its natural rate • Associated with the business cycles: short-run If you want to learn more check out Define velocity.
• Result of deficient demand
Labor Market Statistics: Policy
• The Official U Rate (U-3) and others: published by BLS o Statistics based on demographic information
o Measured the length of U
W1: actual wage Weqm
• Data shows drastically different labor market experiences for different groups (age, race, etc.)
• Trends help policy makers make better polices
o Caveat: Trends can inform, even if data flawed
Types of Unemployed People
• Marginally Attached: person is neither working nor looking for work; person wants to work, is available, and has looked in the past 2 months. Is not included in U.
• Discouraged Workers: person would like to work, but has stopped looking because of a, “given up on the job market” related reason. Identified as “Not in the Labor Force.”
• Underemployment: person is working below their skill level. U-rate fails to show economy failure.