Unemployment

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• One main goal
• Unemployment- workers are actively looking for a job but aren't working unemployment rate: # of unemployed / # in labor force x 100

Labor Force

• Who is in the labor force? Above 16 yrs, able and willing to work, not institutionalized in jails or hospitals, not in military, in school full time, or retired

Types of Unemployment

• 1. frictional unemployment- temporary unemployment or between jobs;
• qualified workers with transferable skills
• ex: college graduates looking for jobs, individuals fired and looking for a better job
• TEMPORARY

Types of Unemployment

• 2. Structural unemployment - changes in labor force make skills obsolete
• workers don't have transferrable skills
• jobs will never come back, workers must learn new skills to get a job
• permanent loss of these jobs = creative destruction ex: VCR repair, milk man

Types of Unemployment

• 3. Cyclical Unemployment - caused from a recession as demand for goods and services falls, demand for labor falls and workers are fired
• BAD
• ex: steel workers laid off during recessions

Natural Rate of Unemployment

• goal is not 0% because fictional & structural unemployment are present at all times
• people will always be between jobs or replaced by technology

YOUTUBE REVIEW

• http://youtu.be/_CdTu1pk06w

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"Are you Unemployed?" Game

• you are....
• Applying to McDonalds
• part time waitress
• stay at home mom
• in the military
• in jail :(
• Mr. Segs
• attending Harvard

In a Broader Context

• Phillip's Curve
• inverse relationship between unemployment rate and wage inflation
• wages increased slowly when the unemployment rate was high and more rapidly when the unemployment rate was low

Real World

• structural employment is a problem as technology progresses – worker's skills no longer match needs of employers and must update training w/ new technologies
• wages paid for labor fuel consumer spending
• output of labor is essential for companies

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