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Unemployment

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The examples and perspective in this article may not represent a worldwide view of
the subject. Please improve this article and discuss the issue on the talk page. (February
2008)

CIA figures for the latest world unemployment rates


Unemployment occurs when a person is available to work but currently without work.[1] The
prevalence of unemployment is usually measured using the unemployment rate, which is defined
as the percentage of those in the labor force who are unemployed. The unemployment rate is also
used in economic studies and economic indices such as the United States' Conference Board's
Index of Leading Indicators as a measure of the state of the macroeconomics.
Most economic schools of thought agree that the cause of involuntary unemployment is that
wages are above the market clearing rate. However, there are disagreements as to why this would
be the case: the economists argue that in a downturn, wages stay high because they are naturally
'sticky', whilst others argue that minimum wages and union activity keep them high. Keynesian
economics emphasizes unemployment resulting from insufficient effective demand for goods
and services in the economy (cyclical unemployment). Others point to structural problems,
inefficiencies, inherent in labour markets (structural unemployment). Classical or neoclassical
economics tends to reject these explanations, and focuses more on rigidities imposed on the labor
market from the outside, such as minimum wage laws, taxes, and other regulations that may
discourage the hiring of workers (classical unemployment). Yet others see unemployment as
largely due to voluntary choices by the unemployed (frictional unemployment). Alternatively,
some blame unemployment on disruptive technologies or Globalisation. There is also
disagreement on how exactly to measure unemployment. Different countries experience different
levels of unemployment; traditionally, the USA experiences lower unemployment levels than
countries in the European Union,[2] although there is variant there, with countries like the UK and
Denmark outperforming Italy and France and it also changes over time (e.g. the Great
depression) throughout economic cycles.
Unemployment rate as a percentage of the labor force in the United States according to the U.S.
Bureau of Labor Statistics.

Contents
[hide]
• 1 Okun's Law
• 2 Involuntary unemployment
• 3 Solutions
○ 3.1 Demand side
○ 3.2 Supply side
○ 3.3 Tax-related
• 4 Types of unemployment
○ 4.1 Frictional unemployment
○ 4.2 Classical unemployment
 4.2.1 Cyclical or Keynesian unemployment
○ 4.3 Structural unemployment
○ 4.4 Long-term unemployment
• 5 Costs of unemployment
○ 5.1 Individual
○ 5.2 Social
• 6 Historical and contemporary unemployment
• 7 Measurement
○ 7.1 European Union (Eurostat)
○ 7.2 United States Bureau of Labor Statistics
○ 7.3 Limitations of the unemployment definition
• 8 Aiding the unemployed
• 9 Benefits
• 10 See also
• 11 References
• 12 External links

[edit] Okun's Law


Okun's law states that for every 3% GDP falls relative to potential GDP, unemployment rises 1%
(of the total workforce). When the economy operates at productive capacity, it will experience
the natural rate of unemployment.[3]
U= ^u-h[100(y/yn)-100]
[edit] Involuntary unemployment
Say's law states that in a laissez-faire economy, every seller will in time find a buyer at some
price, called the market clearing price. Sellers and buyers may refuse the clearing price but this
personal decision is voluntary, and so such a transaction lies outside the economic model. This
theory relies heavily on the absence of government regulation and assumes a developed economy
without sabotage where labor strikes are illegal.[citation needed]
In The General Theory, Keynes attempted to show that Say’s law did not apply in the real world
of the Depression because of oversaving and private investor timidity, with the consequence that
people could be thrown out of work involuntarily and not be able to find acceptable new
employment.
This conflict between the neoclassical and Keynesian theories has had strong influence on
government policy. The tendency for government is to curtail and eliminate unemployment
through increases in benefits and government jobs, and to encourage the job-seeker to both
consider new careers and relocation to another city.
Involuntary unemployment does not exist in agrarian societies nor is it formally recognized to
exist in underdeveloped but urban societies, such as the mega-cities of Africa and of
India/Pakistan. In such societies, a suddenly unemployed person must meet their survival needs
either by getting a new job at any price, becoming an entrepreneur, or joining the underground
economy of the hustler.[4]
Involuntary unemployment is discussed from the narrative standpoint in stories by Ehrenreich,
the narrative sociology of Bourdieu, and novels of social suffering such as John Steinbeck's The
Grapes of Wrath.
[edit] Solutions
Societies try a number of different measures to get as many people as possible into work.
However, attempts to reduce the level of unemployment beyond the Natural rate of
unemployment generally fail, resulting only in less output and more inflation[citation needed].
[edit] Demand side
According to classical economic theory, markets reach equilibrium where supply equals demand;
everyone who wants to sell at the market price can. Those who do not want to sell at this price do
not; in the labour market this is classical unemployment. Increases in the demand for labour will
move the economy along the demand curve, increasing wages and employment. The demand for
labour in an economy is derived from the demand for goods and services. As such, if the demand
for goods and services in the economy increases, the demand for labour will increase, increasing
employment and wages. Monetary policy and fiscal policy can both be used to increase short-
term growth in the economy, increasing the demand for labour and decreasing unemployment.
[edit] Supply side
However, the labour market is not efficient: it doesn't clear. Minimum wages and union activity
keep wages from falling, which means too many people want to sell their labour at the going
price but cannot. Supply-side policies can solve this by making the labour market more flexible.
These include removing the minimum wage and reducing the power of unions. Other supply side
policies include education to make workers more attractive to employers.
Supply side reforms also increase long-term growth. This increased supply of goods and services
requires more workers, increasing employment. It is argued that supply side policies, which
include cutting taxes on businesses and reducing regulation, create jobs and reduce
unemployment.
[edit] Tax-related
One structural solution to unemployment proposed was a graduated retail tax, or "jobs levy", to
firms where labor is more expensive than capital. This method will shift tax burden to capital
intensive firms and away from labor intensive firms. In theory this will make firms shift
operations to a more politically desired balance between labor intensive and capital intensive
production. The excess tax revenue from the jobs levy would finance labor intensive public
projects.[5] However, by raising the value of labour artificially above capital, this would
discourage capital investment, the source of economic growth. With less growth, long-run
employment would fall.
[edit] Types of unemployment
Though there have been several definitions of voluntary and involuntary unemployment in the
economics literature, a simple distinction is often applied. Voluntary unemployment is attributed
to the individual's decisions, whereas involuntary unemployment exists because of the socio-
economic environment (including the market structure, government intervention, and the level of
aggregate demand) in which individuals operate. In these terms, much or most of frictional
unemployment is voluntary, since it reflects individual search behavior. On the other hand,
cyclical unemployment, structural unemployment, and classical unemployment, are largely
involuntary in nature. However, the existence of structural unemployment may reflect choices
made by the unemployed in the past, while classical unemployment may result from the
legislative and economic choices made by labor unions and/or political parties. So in practice,
the distinction between voluntary and involuntary unemployment is hard to draw. The clearest
cases of involuntary unemployment are those where there are fewer job vacancies than
unemployed workers even when wages are allowed to adjust, so that even if all vacancies were
to be filled, there would be unemployed workers. This is the case of cyclical unemployment, for
which macroeconomic forces lead to microeconomic unemployment. See also: unemployment
types
[edit] Frictional unemployment
Frictional unemployment occurs when a worker moves from one job to another. While he
searches for a job he is experiencing frictional unemployment. This applies for fresh graduates
looking for employment as well. This is a productive part of the economy, increasing both the
worker's long term welfare and economic efficiency, and is also a type of voluntary
unemployment. It is a result of imperfect information in the labor market, because if job seekers
knew that they would be employed for a particular job vacancy, almost no time would be lost in
getting a new job, eliminating this form of unemployment.
Frictional unemployment is always present in an economy, so the level of involuntary
unemployment is properly the unemployment rate minus the rate of frictional unemployment,
which means that increases or deceases in unemployment are normally under-represented in the
simple statistics.[6]
[edit] Classical unemployment
Classical or real-wage unemployment occurs when real wages for a job are set above the market-
clearing level. Libertarian economists like F.A. Hayek argued that unemployment increases the
more the government intervenes into the economy to try to improve the conditions of those with
jobs. For example, minimum wages raise the cost of labourers with few skills to above the
market equilibrium, resulting in people who wish to work at the going rate but cannot as wage
enforced is greater than their value as workers becoming unemployed.[7][8] They believed that
laws restricting layoffs made businesses less likely to hire in the first place, as hiring becomes
more risky, leaving many young people unemployed and unable to find work.[8]
Some, such as Murray Rothbard,[9] suggest that even social taboos can prevent wages from
falling to the market clearing level.
[edit] Cyclical or Keynesian unemployment
Cyclical or Keynesian unemployment, also known as demand deficient unemployment, occurs
when there is not enough aggregate demand in the economy. This is caused by a business cycle
recession, and wages not falling to meet the equilibrium level
[edit] Structural unemployment
Structural unemployment is caused by a mismatch between jobs offered by employees and
potential workers. This may pertain to geographical location, skill variation, and many other
factors. If such a mismatch exists, frictional unemployment is likely to be more significant as
well. - For example, in the late 1990s there was a tech bubble, creating demand for computer
specialists. In 2000–2001 this bubble collapsed. A housing bubble soon formed, creating demand
for real estate workers, and many computer workers had to retrain to find employment.
André Gorz believes that structural unemployment could be permanent in modern society, as the
microchip revolution and the explosion in computer science and robotizing of work even in less
developed industrialized countries increase productivity.
Paul Krugman, winner of the Nobel Memorial Prize in Economics, has attacked this view,
arguing that "One problem capitalism does not suffer from ... is being too productive for its own
good."[10].

“ Productivity gains in steel may reduce the number of jobs in steel, but they create jobs
elsewhere (if only by lowering the price of steel, and therefore releasing money to be ”
spent on other things); advanced countries may lose garment industry jobs to
developing-country exports, but they gain other jobs producing the goods that those
countries buy with their new export income. To observe that productivity growth in a
particular industry reduces employment in that same industry tells us nothing about
whether productivity growth in the economy as a whole reduces employment in the
economy as a whole.[11]

[edit] Long-term unemployment


This is normally defined, for instance in European Union statistics, as unemployment lasting for
longer than one year. It is an important indicator of social exclusion.
[edit] Costs of unemployment
[edit] Individual

An 1837 political cartoon about unemployment in the United States.


Unemployed individuals are unable to earn money to meet financial obligations. Failure to pay
mortgage payments or to pay rent may lead to homelessness through foreclosure or eviction.
Unemployment increases susceptibility to malnutrition, illness, mental stress, and loss of self-
esteem, leading to depression. According to a study published in Social Indicator Research, even
those who tend to be optimistic find it difficult to look on the bright side of things when
unemployed. Using interviews and data from German participants aged 16 to 94 – including
individuals coping with the stresses of real life and not just a volunteering student population –
the researchers determined that even optimists struggled with being unemployed.[12]
Dr. M. Brenner conducted a study in 1979 on the "Influence of the Social Environment on
Psychology." Brenner found that for every 10% increase in the number of unemployed there is
an increase of 1.2% in total mortality, a 1.7% increase in cardiovascular disease, 1.3% more
cirrhosis cases, 1.7% more suicides, 4.0% more arrests, and 0.8% more assaults reported to the
police.[13] A more recent study by Christopher Ruhm[14] on the effect of recessions on health
found that several measures of health actually improve during recessions. As for the impact of an
economic downturn on crime, during the Great Depression the crime rate did not decrease.
Because unemployment insurance in the U.S. typically does not replace 50% of the income one
received on the job (and one cannot receive it forever), the unemployed often end up tapping
welfare programs such as Food Stamps or accumulating debt. Higher government transfer
payments in the form of welfare and food stamps decrease spending on productive economic
goods, decreasing GDP.[citation needed]
Some hold that many of the low-income jobs are not really a better option than unemployment
with a welfare state (with its unemployment insurance benefits). But since it is difficult or
impossible to get unemployment insurance benefits without having worked in the past, these jobs
and unemployment are more complementary than they are substitutes. (These jobs are often held
short-term, either by students or by those trying to gain experience; turnover in most low-paying
jobs is high) Unemployment insurance keeps an available supply of workers for the low-paying
jobs, while the employers' choice of management techniques (low wages and benefits, few
chances for advancement) is made with the existence of unemployment insurance in mind. This
combination promotes the existence of one kind of unemployment, frictional unemployment.
[citation needed]

Another cost for the unemployed is that the combination of unemployment, lack of financial
resources, and social responsibilities may push unemployed workers to take jobs that do not fit
their skills or allow them to use their talents. Unemployment can cause underemployment, and
drinking in the afternoon.
The fear of job loss can spur psychological anxiety.
[edit] Social
An economy with high unemployment is not using all of the resources, i.e. labour, available to it.
Since it is operating below its production possibility frontier, it could have higher output if all the
workforce were usefully employed. However, there is a trade off between economic efficiency
and unemployment: if the frictionally unemployed accepted the first job they were offered, they
would be likely to be operating at below their skill level, reducing the economy's efficiency.[15]
It is estimated that, during the Great Depression, unemployment due to sticky wages cost the US
economy about $4 trillion.[citation needed] This is many times larger than losses due to monopolies,
cartels and tariffs.[citation needed]
During a long period of unemployment, workers can lose their skills, causing a loss of human
capital. Being unemployed can also reduce the life expectancy of workers by about 7 years [16]
High unemployment can encourage xenophobia and protectionism as workers fear that
foreigners are stealing their jobs.[citation needed] Efforts to preserve existing jobs of domestic and
native workers include legal barriers against "outsiders" who want jobs, obstacles to
immigration, and/or tariffs and similar trade barriers against foreign competitors.
Finally, a rising unemployment rate concentrates the oligopsony power of employers by
increasing competition amongst workers for scarce employment opportunities.[citation needed].
[edit] Historical and contemporary unemployment

This section is suspect and may represent a minority view.

Preliterate communities treat their members as parts of an extended family and thus do not allow
unemployment.[citation needed] In historical societies such as European feudalism, the serfs were never
"unemployed" because they had direct access to the land, and the needed tools, and could thus
work to produce crops. Just as on the American frontier during the nineteenth century, there were
day labourers and subsistence farmers on poor land, whose position in society was somewhat
analogous to the unemployed of today. But they were not truly unemployed, since they could
find work and support themselves on the land.[citation needed]
The decade of the 1930s saw the Great Depression in the United States and many other
countries. In 1929, the U.S. unemployment rate averaged 3%.[17] In 1933, 25% of all American
workers and 37% of all nonfarm workers were unemployed,[18] with firms unwilling to employ
workers at the abnormally high wage rates enforced while output fell.[19] In Cleveland, Ohio, the
unemployment rate was 60%; in Toledo, Ohio, 80%.[20] Unemployment in Canada reached 27%
at the depth of the Depression in 1933.[21] In some towns and cities in the north east of England,
unemployment reached as high as 70%.[22] In Germany the unemployment rate reached nearly
25% in 1932.[23] One Soviet trading corporation in New York averaged 350 applications a day
from Americans seeking jobs in the Soviet Union.[24] There were two million homeless people
migrating across the United States. One Arkansas man walked 900 miles looking for work.[20]
Under systems of slave-labor, slave-owners never let their property be unemployed for long. (If
anything, they would sell the unneeded laborer.) Planned economies such as the old Soviet
Union or today's Cuba typically provide occupation for everyone, using substantial overstaffing
if necessary. (This is called "hidden unemployment," which is sometimes seen as a kind of
underemployment[citation needed] Workers' cooperatives—such as those producing plywood in the
U.S. Pacific Northwest—do not let their members become unemployed unless the co-op itself
goes bankrupt.[citation needed]
Even in broadly Capitalist economies, unemployment rates can vary significantly. Relatively
lightly regulated labour markets, like those of America, the UK or Denmark, tend to have lower
involuntary unemployment, though in recessions their unemployment rates can increase very
rapidly because firms find it easier to lay off workers. France, Germany and Italy, with more
regulation and stronger unions, tend to have higher involuntary unemployment, though the
increases in times of recession tend to be less because firms find it harder to lay off workers.
Some countries like Spain suffer from both high normal unemployment and a sharp increase.[25]
[edit] Measurement
Though many people care about the number of unemployed, economists typically focus on the
unemployment rate. This corrects for the normal increase in the number of people employed due
to increases in population and increases in the labor force relative to the population. The
unemployment rate is expressed as a percentage, and is calculated as follows:

As defined by the International Labour Organization, "unemployed workers" are those who are
currently not working but are willing and able to work for pay, currently available to work, and
have actively searched for work.[26] Many countries such as the UK and Sweden have begun
counting more people as disabled, reducing their unemployment figures.
Since not all unemployment may be "open" and counted by government agencies, official
statistics on unemployment may not be accurate[27].
The ILO describes 4 different methods to calculate the unemployment rate:[28]
• Labour Force Sample Surveys are the most preferred method of unemployment rate
calculation since they give the most comprehensive results and enables calculation of
unemployment by different group categories such as race and gender. This method is the
most internationally comparable.
• Official Estimates are determined by a combination of information from one or more of
the other three methods. The use of this method has been declining in favor of Labour
Surveys.
• Social Insurance Statistics such as unemployment benefits, are computed base on the
number of persons insured representing the total labour force and the number of persons
who are insured that are collecting benefits. This method has been heavily criticized due
to the expiration of benefits before the person finds work.
• Employment Office Statistics are the least effective being that they only include a
monthly tally of unemployed persons who enter employment offices. This method also
includes unemployed who are not unemployed per the ILO definition.
[edit] European Union (Eurostat)
Eurostat, the statistical office of the European Union, defines unemployed as those persons age
15 to 74 who are not working, have looked for work in the last four weeks, and ready to start
work within two weeks, which conform to ILO standards. Both the actual count and rate of
unemployment are reported. Statistical data are available by member state, for the European
Union as a whole (EU27) as well as for the euro area (EA16). Eurostat also includes a long-term
unemployment rate. This is defined as part of the unemployed who have been unemployed for an
excess of 1 year.
The main source used is the European Union Labour Force Survey (EU-LFS). The EU-LFS
collects data on all member states each quarter. For monthly calculations, national surveys or
national registers from employment offices are used in conjunction with quarterly EU-LFS data.
The exact calculation for individual countries, resulting in harmonised monthly data, depend on
the availability of the data.[29]

[edit] United States Bureau of Labor Statistics

Unemployment rate in the US by county in 2008.[30] 1.2–3% 3.1–4% 4.1–5% 5.1–


6% 6.1–7% 7.1–8% 8.1–9% 9.1–10% 10.1–11% 11.1–13% 13.1–22.9%
The Bureau of Labor Statistics measures employment and unemployment (of those over 15 years
of age) using two different labor force surveys[31] conducted by the United States Census Bureau
(within the United States Department of Commerce) and/or the Bureau of Labor Statistics
(within the United States Department of Labor) that gather employment statistics monthly. The
Current Population Survey (CPS), or "Household Survey", conducts a survey based on a sample
of 60,000 households. This Survey measures the unemployment rate based on the ILO definition.
[32]
The data are also used to calculate 5 alternate measures of unemployment as a percentage of
the labor force based on different definitions noted as U1 through U6:[33]
• U1: Percentage of labor force unemployed 15 weeks or longer.
• U2: Percentage of labor force who lost jobs or completed temporary work.
• U3: Official unemployment rate per ILO definition.
• U4: U3 + "discouraged workers", or those who have stopped looking for work because
current economic conditions make them believe that no work is available for them.
• U5: U4 + other "marginally attached workers", or "loosely attached workers", or those
who "would like" and are able to work, but have not looked for work recently.
• U6: U5 + Part time workers who want to work full time, but cannot due to economic
reasons.
Note: "Marginally attached workers" are added to the total labor force for unemployment rate
calculation for U4, U5, and U6. The BLS revised the CPS in 1994 and among the changes the
measure representing the official unemployment rate was renamed U3 instead of U5.[34]
The Current Employment Statistics survey (CES), or "Payroll Survey", conducts a survey based
on a sample of 160,000 businesses and government agencies that represent 400,000 individual
employers.[35] This survey measures only nonagricultural, nonsupervisory employment; thus, it
does not calculate an unemployment rate, and it differs from the ILO unemployment rate
definition. These two sources have different classification criteria, and usually produce differing
results. Additional data are also available from the government, such as the unemployment
insurance weekly claims report available from the Office of Workforce Security, within the U.S.
Department of Labor Employment & Training Administration.[36]
These statistics are for the U.S. economy as a whole, hiding variations among groups. For
January 2008 in the U.S. the unemployment rates were 4.4% for adult men, 4.2% for adult
women, 4.4% for Caucasians, 6.3% for Hispanics or Latinos (all races), 9.2% for African
Americans, 3.2% for Asian Americans, and 18.0% for teenagers.[35]
These percentages represent the usual rough ranking of these different groups' unemployment
rates. The absolute numbers change over time and with the business cycle.[37]
The Bureau of Labor Statistics provides up-to-date numbers via a pdf linked here. The BLS also
provides a readable concise current Employment Situation Summary, updated monthly.[38]
Notes: 1940–2009 data are from Bureau of Labor Statistics[39]. See also "Historical
Comparability" under the Household Data section of the Explanatory Notes at
http://www.bls.gov/cps/eetech_methods.pdf. 1890–1930 data are from Romer.[40] 1930–1940
data are from Coen.[41] Data prior to 1948 are for persons age 14 and over. Data beginning in
1948 are for persons age 16 and over. See image info for complete data.
[edit] Limitations of the unemployment definition
The unemployment rate may be different from the impact of the economy on people. The
unemployment figures indicate how many are not working for pay but seeking employment for
pay. It is only indirectly connected with the number of people who are actually not working at all
or working without pay. Therefore, critics believe that current methods of measuring
unemployment are inaccurate in terms of the impact of unemployment on people as these
methods do not take into account the 1.5% of the available working population incarcerated in
U.S. prisons (who may or may not be working while incarcerated), those who have lost their jobs
and have become discouraged over time from actively looking for work, those who are self-
employed or wish to become self-employed, such as tradesmen or building contractors or IT
consultants, those who have retired before the official retirement age but would still like to work
(involuntary early retirees), those on disability pensions who, while not possessing full health,
still wish to work in occupations suitable for their medical conditions, those who work for
payment for as little as one hour per week but would like to work full-time. These people are
"involuntary part-time" workers, those who are underemployed, e.g., a computer programmer
who is working in a retail store until he can find a permanent job, involuntary stay-at-home
mothers who would prefer to work, and graduate and Professional school students who were
unable to find worthwhile jobs after they graduated with their Bachelor's degrees.
On the other hand, the measures of employment and unemployment may be "too high". In some
countries, the availability of unemployment benefits can inflate statistics since they give an
incentive to register as unemployed. People who do not really seek work may choose to declare
themselves unemployed so as to get benefits; people with undeclared paid occupations may try to
get unemployment benefits in addition to the money they earn from their work. Conversely, the
absence of any tangible benefit for registering as unemployed discourages people from
registering.
However, in countries such as the United States, Canada, Mexico, Australia, Japan and the
European Union, unemployment is measured using a sample survey (akin to a Gallup poll).
According to the BLS, a number of Eastern European nations have instituted labor force surveys
as well. The sample survey has its own problems because the total number of workers in the
economy is calculated based on a sample rather than a census.
It is possible to be neither employed nor unemployed by ILO definitions, i.e., to be outside of the
"labor force." These are people who have no job and are not looking for one. Many of these are
going to school or are retired. Family responsibilities keep others out of the labor force. Still
others have a physical or mental disability which prevents them from participating in labor force
activities. And of course some people simply elect not to work, preferring to be dependent on
others for sustenance.
Typically, employment and the labor force include only work done for monetary gain. Hence, a
homemaker is neither part of the labor force nor unemployed. Nor are full-time students nor
prisoners considered to be part of the labor force or unemployment. The latter can be important.
In 1999, economists Lawrence F. Katz and Alan B. Krueger estimated that increased
incarceration lowered measured unemployment in the United States by 0.17% between 1985 and
the late 1990s. In particular, as of 2005, roughly 0.7% of the US population is incarcerated (1.5%
of the available working population).
Children, the elderly, and some individuals with disabilities are typically not counted as part of
the labor force in and are correspondingly not included in the unemployment statistics. However,
some elderly and many disabled individuals are active in the labor market.
In the early stages of an economic boom, unemployment often rises. This is because people join
the labor market (give up studying, start a job hunt, etc.) because of the improving job market,
but until they have actually found a position they are counted as unemployed. Similarly, during a
recession, the increase in the unemployment rate is moderated by people leaving the labor force
or being otherwise discounted from the labor force, such as with the self-employed.
For the fourth quarter of 2004, according to OECD, (source Employment Outlook 2005 ISBN
92-64-01045-9), normalized unemployment for men aged 25 to 54 was 4.6% in the USA and
7.4% in France. At the same time and for the same population the employment rate (number of
workers divided by population) was 86.3% in the U.S. and 86.7% in France.
This example shows that the unemployment rate is 60% higher in France than in the USA, yet
more people in this demographic are working in France than in the USA, which is
counterintuitive if it is expected that the unemployment rate reflects the health of the labor
market.[42][43].
Due to these deficiencies, many labor market economists prefer to look at a range of economic
statistics such as labor market participation rate, the percentage of people aged between 15 and
64 who are currently employed or searching for employment, the total number of full-time jobs
in an economy, the number of people seeking work as a raw number and not a percentage, and
the total number of person-hours worked in a month compared to the total number of person-
hours people would like to work. In particular the NBER does not use the unemployment rate but
prefer various employment rates to date recessions [44].
[edit] Aiding the unemployed
Many countries have aids for the unemployed as part of the social welfare. These unemployment
benefits include unemployment insurance, welfare, unemployment compensation and subsidies
to aid in retraining. The main goal of these programs is to alleviate short-term hardships and,
more importantly, to allow workers more time to search for a job.
In the U.S. the unemployment insurance allowance one receives is based solely on previous
income (not time worked, family size, etc.) and usually compensates for one-third of one's
previous income. To qualify, one must reside in their respective state for at least a year and, of
course, work. The system was established by the Social Security Act of 1935. While 90% of
citizens are covered on paper, only 40% could actually receive benefits.[citation needed] In cases of
highly seasonal industries the system provides income to workers during the off seasons, thus
encouraging them to stay attached to the industry.

Unemployed man looking for a job in 1928

Families on relief 1935–41


Relief cases 1936–1941
Monthly average in 1,000

Year 1936 1937 1938 1939 1940 1941

Workers employed

WPA 1,99 2,22 1,932 2,91 1,97 1,63


5 7 1 1 8

CCC and NYA 712 801 643 793 877 919

Other federal work projects 554 663 452 488 468 681

Public assistance cases

1,30 2,13 2,30 2,51


Social security programs 602 1,852
6 2 8 7

2,94 1,48 1,64 1,57 1,20


General relief 1,611
6 4 7 0 6

5,88 5,66 6,75 5,86 5,16


Total families helped 5,474
6 0 1 0 7

Unemployed workers (Bur Lab 9,03 7,70 10,39 9,48 8,12 5,56
Stat) 0 0 0 0 0 0

Coverage (cases/unemployed) 65% 74% 53% 71% 72% 93%

source: Donald S. Howard, WPA and Federal Relief Policy. 1943 p 34.

Year Unemployment (% labor force)

1933 24.9

1934 21.7

1935 20.1
1936 16.9

1937 14.3

1938 19.0

1939 17.2

1940 14.6

1941 9.9

1942 4.7

1943 1.9

1944 1.2

1945 1.9

source: Historical Statistics US (1976) series D-86


See also welfare and training.
[edit] Benefits
Main article: Full employment
Unemployment may have advantages as well as disadvantages for the overall economy. Notably,
it may help avert runaway inflation, which negatively affects almost everyone in the affected
economy and has serious long-term economic costs. However the historic assumption that full
local employment must lead directly to local inflation has been attenuated, as recently expanded
international trade has shown itself able to continue to supply low-priced goods even as local
employment rates rise closer to full employment.[citation needed]
The inflation-fighting benefits to the entire economy arising from a presumed optimum level of
unemployment has been studied extensively. Before current levels of world trade were
developed, unemployment was demonstrated to reduce inflation, following the Phillips curve, or
to decelerate inflation, following the NAIRU/natural rate of unemployment theory, since it is
relatively easy to seek a new job without losing one's current one. And when more jobs are
available for fewer workers (lower unemployment), it may allow workers to find the jobs that
better fit their tastes, talents, and needs.
As in the Marxian theory of unemployment, special interests may also benefit: some employers
may expect that employees with no fear of losing their jobs will not work as hard, or will
demand increased wages and benefit. According to this theory, unemployment may promote
general labor productivity and profitability by increasing employers' monopsony-like power (and
profits).
Optimal unemployment has also been defended as an environmental tool to brake the constantly
accelerated growth of the GDP to maintain levels sustainable in the context of resource
constraints and environmental impacts. However the tool of denying jobs to willing workers
seems a blunt instrument for conserving resources and the environment—it reduces the
consumption of the unemployed across the board, and only in the short-term. Full employment of
the unemployed workforce, all focused toward the goal of developing more environmentally
efficient methods for production and consumption might provide a more significant and lasting
cumulative environmental benefit and reduced resource consumption.[45] If so the future economy
and workforce would benefit from the resultant structural increases in the sustainable level of
GDP growth.
Some critics of the "culture of work" such as anarchist Bob Black see employment as
overemphasized culturally in modern countries. Such critics often propose quitting jobs when
possible, working less, reassessing the cost of living to this end, creation of jobs which are "fun"
as opposed to "work," and creating cultural norms where work is seen as unhealthy. These
people advocate an "anti-work" ethic for life.[citation needed]
From a spiritual perspective Dr. Jennifer Howard believes there are may be benefits from
unemployment. "The good news is that after the initial fear, we might find that the job loss is an
opportunity for growing into something better suited for us and in turn help us feel more
successful in our life. The important thing is to be kind to ourselves by eating and sleeping well,
exercising, journaling and taking time to go inside ourselves to reflect on our various highly
charged thoughts and feelings. Now that we have been given some time, we could take
advantage of looking more closely at what is important to us. Remember, any difficulty can be
taken as an opportunity for great healing. Part of being happy, productive and mature is by
learning to take life as it comes and making the best with what we have." Howard, Dr. Jennifer.
"What is Personal Development." Dealing With Your Job Loss (2009) Web.23 Jun 2009.
[edit] See also
• Effective unemployment rate
• Employment gap
• Employment Protection Legislation
• Employment rate
• FRED (Federal Reserve Economic Data)
• Job guarantee
• Labour market
• List of countries by unemployment rate
• List of U.S. states by unemployment rate
• NAIRU
• Poverty
• Underemployment
• Unemployment benefit
• Waithood
• Workfare
• Youth Exclusion
[edit] References
1. ^ "International Labour Organization: Resolution concerning statistics of the economically active
population, employment, unemployment and underemployment, adopted by the Thirteenth
International Conference of Labour Statisticians (October 1982); see page 4; accessed November
26, 2007" (PDF). http://www.ilo.org/public/english/bureau/stat/download/res/ecacpop.pdf.
2. ^ http://www.cepr.net/documents/publications/US-EU-UR-2009-05.pdf
3. ^ Alain Anderton, Economics. Fourth Edition, 2006
4. ^ Bourdieu, Pierre. THE WEIGHT OF THE WORLD: Social Suffering in Contemporary Society.
5. ^ Robert Struble, Jr., "Toward a Structural Solution to Unemployment" International Journal of
Social Economics 20, no. 11 (1993): 15–26. Also seen in Treatise on Twelve Lights, (2007–08
ed.), chapter 8, "Bolstering Workers: Structuring Full-Employment into Capitalism."
6. ^ http://econlog.econlib.org/archives/2009/05/quiggan_takes_m.html
7. ^ F. A. Hayek, The Constitution of Liberty
8. ^ a b Alain Anderson, Economics. Fourth edition, 2006
9. ^ America's Great Depression p. 45
10.^ http://web.mit.edu/krugman/www/Xssupply.htm
11.^ "IS CAPITALISM TOO PRODUCTIVE?". http://web.mit.edu/krugman/www/Xssupply.htm.
Retrieved 2009-05-27.
12.^ Even Optimists Get the Blues When Pink-slipped Newswise, Retrieved on October 27, 2008.
13.^ Richard Ashley (2007). "Fact sheet on the impact of unemployment" (PDF). Virginia Tech,
Department of Economics. http://ashleymac.econ.vt.edu/ashley/3204/brenner.pdf. Retrieved
2007-10-11 2007.
14.^ Christopher Ruhm, "Are Recessions Good for Your Health?", Quarterly Journal of Economics
2000, 115(2): 617–650
15.^ PThy_Edn_1_Chap_23.rtf
16.^ Alain Anderson, Economics. Fourth Edition 2006
17.^ Economic Recovery in the Great Depression, Frank G. Steindl, Oklahoma State University
18.^ Great Depression, The Concise Encyclopedia of Economics
19.^ http://www.gmu.edu/departments/economics/bcaplan/e311/mac10.htm
20.^ a b Overproduction of Goods, Unequal Distribution of Wealth, High Unemployment, and
Massive Poverty, From: President’s Economic Council
21.^ 1929–1939 – The Great Depression, Source: Bank of Canada
22.^ Great Depression (United Kingdom), Knowledgerush.com
23.^ About the Great Depression, University of Illinois
24.^ A reign of rural terror, a world away, U.S. News, June 22, 2003
25.^ http://econlog.econlib.org/archives/2009/05/the_nuances_of.html
26.^ International Labour Organization, Bureau of Statistics,The Thirteenth International
Conference of Labour Statisticians, received July 21, 2007
27.^ Official unemployment numbers omit discouraged seekers, part-time workers
28.^ International Labour Organization, LABORSTA,[1], retrieved July 22, 2007
29.^ "European Commission, Eurostat".
http://epp.eurostat.ec.europa.eu/cache/ITY_SDDS/EN/une_esms.htm. Retrieved November 05,
2009.
30.^ Bureau of Labor Statistics (2009). "Labor force data by county, 2008 annual averages".
ftp://ftp.bls.gov/pub/special.requests/la/laucnty08.txt.
31.^ United States, Bureau of Labor Statistics,[2], retrieved July 23, 2007
32.^ U.S. Department of Labor, Bureau of Labor Statistics, Current Population Survey overview,
retrieved May 25, 2007
33.^ U.S. Department of Labor, Bureau of Labor Statistics, [3], retrieved August 22, 2007
34.^ John E. Bregger and Steven E. Haugen (1995). "BLS introduces new range of alternative
unemployment measures" Monthly Labor Review, October: 19–29. [4], U.S. Department of
Labor, Bureau of Labor Statistics, retrieved March 6, 2009.
35.^ a b U.S. Department of Labor, Bureau of Labor Statistics, "The Employment Situation: January
2008", January 2008
36.^ U.S. Department of Labor, Employment & Training Administration, Office of Workforce
Security, UI Weekly Claims
37.^ "Historical Comparability" (2006). Employment and Earnings. Household Data Explanatory
Notes, February 2006 http://www.bls.gov/cps/eetech_methods.pdf.
38.^ Employment Situation Summary
39.^ Bureau of Labor Statistics, Employment status of the civilian noninstitutional population, 1940
to date [5], retrieved March 6, 2009
40.^ Christina Romer (1986). "Spurious Volatility in Historical Unemployment Data", The Journal
of Political Economy, 94(1): 1–37.
41.^ Robert M. Coen (1973). "Labor Force and Unemployment in the 1920's and 1930's: A Re-
Examination Based on Postwar Experience", The Review of Economics and Statistics, 55(1): 46–
55.
42.^ "Dean Baker, Center for Economic and Policy Research".
http://www.prospect.org/csnc/blogs/beat_the_press_archive?
month=01&year=2007&base_name=wall_street_journal_gets_germa&162#comment-1679545.
43.^ Raymond Torres, OECD head of Employment Analysis, Le Monde, 30 mai 2007 :
unemployment measure is less and less meaningful to measure labour market efficiency.
44.^ Determination of the December 2007 Peak in Economic Activity, November 28, 2008
45.^ http://treehugger.com/files/2008/02/4_reasons_recession_bad_environment.php Counter-Point:
4 Reasons Why Recession is BAD for the Environment by Michael Graham Richard, Gatineau,
Canada on 02. 6.08 Business & Politics

[edit] External links


• Economic Policy Institute
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