UNIT 2 Notes - February 4th, 2016

Unemployment: Failure to use available resources, particularly labor, to produce desired goods and services.

Labor Force: Anybody above 16 Years of Age, able and willing to work. (Employed/Unemployed)

Not in Labor Force:

·         Military

·         Homemakers

·         Retirees

·         Disabled

·         Mental Instituters

·         Criminals

·         Students

·         Those not looking for work

Unemployment Rate: Ideal 4% - 5% ; Full Employment/Natural Rate of Unemployment (NRU)

(Number of Unemployed / Labor Force (# of employed + # of unemployed)) X 100

Types of Unemployment

·         Frictional: People who are looking for a job, temporarily unemployed, or is in-between jobs. Individuals with transferrable skills. EX: High school/college graduates looking for a job or individuals who leave their job in hope of finding a better one.

·         Structural: Changes in the structure of the labor force make some skills obsolete. These workers do not have transferable skills.

·         Seasonal: It is due to the time of the year and nature of the job. EX: School bus drivers, Santa/Easter Bunny impersonators, Lifeguards, Construction workers.

·         Cyclical: Unemployment that results from economic downturns such as a recession. As demands for goods & services fall, demand for labor falls, and workers are laid off. EX: Closings of Macy’s or Walmart.

Two of the Four unemployment types are unavoidable; Frictional and Structural = NRU

Full Employment means no Cyclical Unemployment.