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By the end of this section, you will be able to:

  • Calculate the labor force percentage and the unemployment rate
  • Explain hidden unemployment and what it means to be in or out of the labor force
  • Evaluate the collection and interpretation of unemployment data

Unemployment is typically described in newspaper or television reports as a percentage or a rate. A recent report might have said, for example, from August 2009 to November 2009, the U.S. unemployment rate rose from 9.7% to 10.0%, but by June 2010, it had fallen to 9.5% . At a glance, the changes between the percentages may seem small. But remember that the U.S. economy has about 155 million adults who either have jobs or are looking for them. A rise or fall of just 0.1% in the unemployment rate of 155 million potential workers translates into 155,000 people, which is roughly the total population of a city like Syracuse, New York, Brownsville, Texas, or Pasadena, California. Large rises in the unemployment rate mean large numbers of job losses. In November 2009, at the peak of the recession, about 15 million people were out of work. Even with the unemployment rate now at 5.5% as of February 2015, about 8 million people total are out of work.

The Bureau of Labor Statistics tracks and reports all data related to unemployment.

Who’s in or out of the labor force?

Should everyone without a job be counted as unemployed? Of course not. Children, for example, should not be counted as unemployed. Surely, the retired should not be counted as unemployed. Many full-time college students have only a part-time job, or no job at all, but it seems inappropriate to count them as suffering the pains of unemployment. Some people are not working because they are rearing children, ill, on vacation, or on parental leave.

The point is that the adult population is not just divided into employed and unemployed. A third group exists: people who do not have a job, and for some reason—retirement, looking after children, taking a voluntary break before a new job—are not interested in having a job, either. It also includes those who do want a job but have quit looking, often due to being discouraged by their inability to find suitable employment. Economists refer to this third group of those who are not working and not looking for work as out of the labor force    or not in the labor force.

The U.S. unemployment rate, which is based on a monthly survey carried out by the U.S. Bureau of the Census, asks a series of questions to divide up the adult population into employed, unemployed, or not in the labor force. To be classified as unemployed, a person must be without a job, currently available to work, and actively looking for work in the previous four weeks. Thus, a person who does not have a job but who is not currently available to work or has not actively looked for work in the last four weeks is counted as out of the labor force.

Employed : currently working for pay

Unemployed : Out of work and actively looking for a job

Out of the labor force : Out of paid work and not actively looking for a job

Questions & Answers

Explain the differences between aggregate demand shocks and aggregate supply shocks
Swagger Reply
what are the measures being taken to reduce inflation in LDCs
Athumam Reply
increase level of production,reduce rates of tax charged
What is economic growth!
Doris Reply
Microeconomics can simply be refers to as the study of a unit economy while macroeconomics can be regarded as a study of economy as a whole or aggregate economy of a country.
Hamzat Reply
Full employment price stability economic growth
using geometry, discuss the four interrelated flows in the circular flows of income
Ahmed Reply
who is there?
Demand refers to the quantity of a commodity that one can buy supported by the willingness and the ability to buy
Noor Reply
Which of the following are assets of the Federal Reserve? a. Treasury bills held by the Federal Reserve b. cash in circulation c. Loans made by commercial banks d. the reserves of commercial banks at the Federal Reserve
Julya Reply
what are the four functions served by money
Michele Reply
It serves as a medium of exchange
It serves as a store of value
It serves as a unit of account
It also serves as a standard for Differed Payment.
Acts as a measure of value.
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Store of value
Hello i want your help if there is someone online
how are you doing
what is balance of payment deficit
A nation or region, which is deficit in exports, and Imports more goods and services and for the payment for imports, it must be borrowed from other states or Nations. mostly, between countries.
Pls Wat ar D Factors to Consedered To Saving
Hello guys how are you doing
I will say a balance of payment deficit is when a country import more goods,services and capital than it export.The country most borrowed from other countries to pay for it imports.
can anyone tell me that why in the income and consumption curve the income is on x axis?
bechar Reply
why inflation in double digit is not good for economy
Obaid Reply
what is mean by zero inflation
some time it is good but some time it is not...
the condition of that economy tell you. is it good are bad?
the definition of the law of demand
Aley Reply
law of damand states all else remains constant or what we can say is ceteris peribus,quantity demanded for a commodity extends with fall in price and vice versa. law of demand explains inverse relationship between price and qua ntity demanded
What is demand and supply
Antwi Reply
Demand refers to how much of that product, item, commodity, or service consumers are willing and able to purchase at a particular price. In other words, supply refers to how much the producers of a product or service are willing to produce and can provide to the market with limited amount of resou
Hello dear
what is gdp per capital and why it is used for?
Era Reply
gross domestic product
gdp per capita is the gross domestic product per person (GDP/population) and is a better indicator of economic health and living standards than GDP alone.
thank you so much 😘
please explain shift in production possibility curve
advances in technology can cause a shift in the ppf because output can increase with use of the same amount of resources (laborers can produce more efficiently, and suppliers are willing to sell more)
but equally natural shocks ie earthquakes or war can move the ppf inward so reducing production capicity
what is crowding out effect?
Sera Reply

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Source:  OpenStax, Macroeconomics. OpenStax CNX. Jun 16, 2014 Download for free at http://legacy.cnx.org/content/col11626/1.10
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