Download Lecture: Unemployment

Jobs and Unemployment
LABOR MARKET INDICATORS
Two Sources of Employment Data in the US
1. Current Employment Statistics (establishment
survey)
2. Current Population Survey (household survey)
LABOR MARKET INDICATORS
 Current Employment Statistics
A survey of payroll records that covers over 300,000 businesses on
a monthly basis and provides detailed industry data on
employment, hours, and earnings of workers on nonfarm payrolls
for the Nation.
Employment is the total number of persons on establishment
payrolls employed full or part time - including temporary and
intermittent employees – data exclude proprietors, self-employed,
unpaid family or volunteer workers, farm workers, and domestic
workers. Government employment covers only civilian workers.
LABOR MARKET INDICATORS
Current Employment Statistics
National estimates of average weekly hours and average hourly
earnings are made for the private sector, with detail for about 850
industries as well as for overtime hours in manufacturing.
The CES survey does not collect occupational information.
Occupational employment information is collected as part of the
Current Population Survey
LABOR MARKET INDICATORS
Current Population Survey
Every month, the U.S. Census Bureau surveys about
60,000 households to establish the sex, age, and job
market status of each member of the household.
The sample is selected to reflect the entire civilian noninstitutional population. Based on responses to a series
of questions on work and job search activities, each
person 16 years and over in a sample household is
classified as employed, unemployed, or not in the labor
force.
21.1 LABOR MARKET INDICATORS
Current Population Survey
Working-age population
Total number of people aged 16 years and over who are
not in a jail, hospital, or some other form of institutional
care.
The working-age population is divided into those in the
labor force and those not in the labor force.
Labor force: The number of people employed plus the
number unemployed.
21.1 LABOR MARKET INDICATORS
Population Survey Criteria
The survey counts as employed all persons who, during
the week before the survey:
1. Worked at least 1 hour in a paid job or 15 hours
unpaid in family business.
2. Were did not work but who had jobs from which they
were temporarily absent.
21.1 LABOR MARKET INDICATORS
The survey counts as unemployed all persons who,
during the week before the survey:
1. Had no employment
2. Were available for work,
and either:
1. Had made efforts to find employment during the
previous four weeks, or
2. Were waiting to be recalled to a job from which they
had been laid off.
21.1 LABOR MARKET INDICATORS
Jan. 2004 Civilian Non-Institutional Population
(222,161,000)
Civilian
NonInstitutional
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100
%
Civilian Non-Institutional Population
Not in the Labor Force
75,298,000
Unemployed
8,297,000
Employed
138,566,000
21.1 LABOR MARKET INDICATORS
Differences in employment estimates:
--The household survey includes agricultural workers, the self-employed,
unpaid family workers, and private household workers among the
employed. These groups are excluded from the establishment survey.
--The household survey includes people on unpaid leave among the
employed. The establishment survey does not.
--The household survey is limited to workers 16 years of age and older.
The establishment survey is not limited by age.
--The household survey has no duplication of individuals, because
individuals are counted only once, even if they hold more than one job. In
the establishment survey, employees working at more than one job and
thus appearing on more than one payroll would be counted separately for
each appearance.
21.1 LABOR MARKET INDICATORS
Employment Data: CPS and CES Sources
400,000
200,000
0
Employed - Current
Population Survey
Jan.
2003
Sept.
2003
Oct.
2003
Nov.
2003
Dec.
2003
Jan.
2004
219,897 221,779 222,039 222,279 222,509 222,161
130,190 129,856 129,944 130,027 130,043 130,155
Employed - Current
Employment Statistics
21.1 LABOR MARKET INDICATORS
Change in Jobs: CPS and CES sources
500,000
0
-500,000
Sept.
2003
Oct. 2003 Nov. 2003 Dec. 2003 Jan. 2004
197,000
451,000
438,000
-54,000
87,000
Change in Jobs (CES -334,000
survey)
88,000
83,000
16,000
112,000
Change in Jobs (CPS
survey)
21.1 LABOR MARKET INDICATORS
Two Main Labor Market Indicators
• The unemployment rate
• The labor force participation rate
Unemployment rate
The percentage of people in the labor force who are
unemployed.
Number of
people unemployed
Unemployment rate =
x 100
Labor force
21.1 LABOR MARKET INDICATORS
Historic Unemployment Rate
19
40
19
45
19
50
19
55
19
60
19
65
19
70
19
75
19
80
19
85
19
90
19
95
20
00
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
21.1 LABOR MARKET INDICATORS
Recent Unemployment Rate Trend
6.2%
6.0%
5.8%
5.6%
5.4%
5.2%
Unemployment
Rate
Jan.
Sept.
Oct.
Nov.
Dec.
Jan.
5.8%
6.1%
6.0%
5.9%
5.7%
5.6%
21.1 LABOR MARKET INDICATORS
Labor force participation rate
The percentage of the working-age population who are
members of the labor force.
Labor force
participation rate =
Labor force
Working-age population
x 100%
21.1 LABOR MARKET INDICATORS
Jan. 2004 Civilian Non-Institutional Population
(222,161,000)
Civilian
NonInstitutional
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100
%
Civilian Non-Institutional Population
Not in the Labor Force
75,298,000
Unemployed
8,297,000
Employed
138,566,000
21.1 LABOR MARKET INDICATORS
Labor Force Participation Rate
2002
1998
1994
1990
1986
1982
1978
1974
1970
1966
1962
1958
1954
1950
1946
1942
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
21.2 LABOR TRENDS AND FLUCTUATIONS
The Participation Rate
The participation rate increased from 59 percent during
the 1960s to 67 percent during the 1990s.
Between 1962 and 2002, the participation rate for
women increased from 38 percent to 60 percent.
Between 1962 and 2002, the participation rate for men
decreased from 82 percent to 74 percent.
21.2 LABOR TRENDS AND FLUCTUATIONS
Figure 21.3
shows the
changing
face of the
labor market.
The labor
force
participation
rate of women
has increased.
21.2 LABOR TRENDS AND FLUCTUATIONS
The labor force
participation
rate of men
has decreased.
The average
participation
rate of both
sexes has
increased.
21.1 LABOR MARKET INDICATORS
Recent Labor Force Participation
66.4%
66.3%
66.2%
66.1%
66.0%
65.9%
65.8%
Labor Force
Participation Rate
Jan.
2003
Sept.
2003
Oct.
2003
Nov.
2003
Dec.
2003
Jan.
2004
66.3%
66.1%
66.2%
66.2%
66.0%
66.1%
21.1 LABOR MARKET INDICATORS
Discouraged Workers
Discouraged workers
People available to work but have not made efforts to
find a job within the previous 4 weeks. Discouraged
workers are NOT a part of the labor force.
21.1 LABOR MARKET INDICATORS
Part-Time Workers
Full-time workers
People who work 35 hours per week.
Part-time workers
People who work less than 35 hours per week.
Involuntary part-time workers
People working 1 to 34 hours per week and are seeking
full-time work.
21.1 LABOR MARKET INDICATORS
Aggregate Hours
The total number of hours worked by all the people
employed during a year.
In June 2002, 135 million people worked an average of
34.7 hours per week.
In the year there are 50 workweeks, so aggregate hours
in 2002 were 234.2 billion.
21.2 LABOR TRENDS AND FLUCTUATIONS
Aggregate and Average Hours
Between 1960 and 2000, the number of people
employed doubled (up 105 percent) but aggregate
hours increased by only 84 percent.
The reason: average hours per worker decreased.
21.2 LABOR TRENDS AND FLUCTUATIONS
Figure 21.5(a) shows aggregate hours:
1962–2002
Between 1962
and 2002,
aggregate hours
increased by an
average of 1.5
percent a year.
21.1 LABOR MARKET INDICATORS
Avg. Weekly Hours Worked
33.9
33.8
33.7
33.6
33.5
33.4
33.3
Avg. Weekly Hours
Worked
Jan.
2003
Sept.
2003
Oct.
2003
Nov.
2003
Dec.
2003
Jan.
2004
33.8
33.6
33.7
33.8
33.5
33.7
21.3 UNEMPLOYMENT
Types of Unemployment
Frictional unemployment
The unemployment that arises from normal labor
turnover—from people entering and leaving the labor
force and from the ongoing creation and destruction of
jobs.
Structural unemployment
The unemployment that arises when changes in
technology or international competition change the skills
needed to perform jobs or change the locations of jobs.
21.3 UNEMPLOYMENT
Seasonal unemployment
The unemployment that arises because of seasonal
weather patterns.
Cyclical unemployment
The fluctuating unemployment over the business cycle
that increases during a recession and decreases during
an expansion.
21.3 UNEMPLOYMENT
Sources of Unemployment
People who become unemployed are:
• Job losers—people who are laid off from their jobs
• Job leavers—people who voluntarily quit their jobs
• Entrants and reentrants—people who have just left
school or who are now looking for a job after a
period out of the labor force.
21.3 UNEMPLOYMENT
Figure 21.6
shows
unemployment
by reasons.
Job losers are
the biggest
group, and
their number
fluctuates
most.
21.3 UNEMPLOYMENT
Figure 21.6 summarizes the labor market flows.
21.3 UNEMPLOYMENT
Job losers and job leavers become unemployed or leave the labor force.
21.3 UNEMPLOYMENT
Entrants and reentrants become unemployed or get jobs.
21.3 UNEMPLOYMENT
Unemployment ends when a person is hired or recalled….
21.3 UNEMPLOYMENT
… or when a person withdraws from the labor force.
21.3 UNEMPLOYMENT
Duration and Demographics of
Unemployment
Figure 21.8(a) compares
the duration of
unemployment in 2000
with 1983
The average duration of
unemployment varies
over the business cycle.
21.3 UNEMPLOYMENT
Duration and Demographics of
Unemployment
The average
unemployment rate was
less in 2000 than in
1983.
The lower the average
unemployment rate, the
shorter is the average
duration of
unemployment.
21.3 UNEMPLOYMENT
Figure 21.8(b) shows
unemployment
demographics.
Black unemployment
is more than twice that
of white.
Teenage unemployment
is three times that of
workers aged 20 and
over.
21.3 UNEMPLOYMENT
Full Employment
Full employment
When there is no cyclical unemployment or,
equivalently, when all the unemployment is frictional or
structural.
Natural unemployment rate
The unemployment rate at full employment.
21.3 UNEMPLOYMENT
Unemployment and Real GDP
Because the unemployment rate fluctuates around the
natural rate, real GDP fluctuates around potential GDP.
Potential GDP
The level of real GDP that the economy would produce
if it were at full employment.
When the unemployment rate is above the natural rate,
real GDP is below potential GDP.
When the unemployment rate is below the natural rate,
real GDP is above potential GDP.
21.3 UNEMPLOYMENT
Figure 21.9(a)shows the
relationship between
unemployment and real
GDP.
As the unemployment
rate fluctuates
around the natural rate
unemployment
(part a), real GDP
fluctuates around
potential GDP (part b).