Unemployment

Unemployment

In compiling unemployment statistics for the United States and other developed countries, an unemployed person is defined as anyone who is capable of working and is actively seeking work but is unable to find a job. Before a person can be unemployed in this sense, he must be an active member of the labor force in search of a job. Students and homemakers do perform "work", but they are not considered employed unless they are paid. However, they are not considered unemployed unless they are actively seeking jobs.

In societies in which a majority of the citizens are able to earn a living by working for others, being unable to locate and obtain a job is a very serious problem. Unemployment is widely used as a measure of workers' welfare because of the human costs and feelings of rejection and personal failure. The number of workers unemployed also shows how well a nation's human resources are used and serves as an index of economic activity. The civilian labor force comprises the total of all civilians classified as employed or unemployed. The total labor force also includes members of the Armed Forces stationed either in the US or abroad. The unemployment rate represents the number unemployed as a percent of the civilian labor force.

Unemployment can be divided by the percent of the civilian labor into four types known as frictional, structural, seasonal, and cyclical. The first form of unemployment is frictional unemployment. Frictional unemployment arises because workers seeking jobs do not find them immediately. While looking for work they are counted as unemployed. This could happen if suppose a person loses a job, perhaps because the work is finished. For example a construction craftsman when the job is finished; or it could happen to an actor or actress when the show closes. It will ordinarily take some time before that person finds another job. But while construction workers and entertainers can ordinarily expect to face this problem from time to time, it is something that can happen to anyone employed. People who are simply between jobs, in this sense, are said to be frictionally unemployed. The amount of frictional unemployment depends on the frequency with which workers change jobs and the time it takes to find new ones. This is a particularly important category, since this category of unemployment can never be eliminated or reduced to zero. Even in the best functioning market economy, there will be some people who are between jobs. However, I think this type of unemployment could be reduced somewhat by more efficient placement services.

The second form of unemployment is structural unemployment. Structural unemployment is caused by the difference between the kinds of workers wanted by employers and the kinds of workers looking for jobs. The imbalances may be caused by inadequacy of skills, location, or personal characteristics. Technological developments necessitate new skills in many industries, leaving those workers who have outdated skills without a job. A plant in a declining industry may close down or move to another area, throwing out of work those employees who are unable to unwilling to move. Workers with inadequate education or training and young workers with little or no experience may be unable to get jobs because employers believe that these employees would not produce enough to be worth paying the legal minimum wage or the rate agreed upon with the union. On the other hand, even highly trained workers can be unemployed. This happened in the United States in the early 1970's, when the large numbers of new graduates with doctoral degrees in physics and mathematics exceeded the number of jobs available in those fields. If employers practice illegal job discrimination against any group, a high unemployment rate for those workers could result even when jobs are plentiful. Structural unemployment shows up most prominently in some cities, in some occupations or industries, for those with below average education, and for some other groups in the labor force.

The third form of unemployment is Seasonal unemployment. This type of unemployment occurs during a seasonal period. Father Christmas tends to only be in demand for a short period of the year, and the rest of the year would certainly be classified as seasonally unemployed. Most other seasonal unemployment is less severe than this, and tends to occur in certain industries. Industries that suffer particularly are: hotel and catering, tourism, fruit picking, and Christmas. The effects of seasonal unemployment are often highly regionalised.

The fourth and final form of unemployment is cyclical unemployment. Cyclical unemployment results from a general lack of demand for labor. When the business cycle turns downward, demand for goods and services drop. Consequently, workers are laid off. In the 19th century, the United States experienced depressions roughly every twenty years. A long and severe depression occurred in the 1890's, when unemployment reached about 18 percent of the civilian labor force, and four less severe depressions occurred in the first quarter of the twentieth century. The worst depression in US History was in the 1930's. At its height, one worker in four was unemployed, and some remained out of work for years. In industrialized countries, with unemployment insurance and other forms of income maintenance, unemployment does not cause as great a hardship as it once did. Measures to stabilize the economy have made economic downturns briefer and less severe.

In the Great Depression of the 1930's, 25 percent of the work force was unemployed in the US, Britain, and Germany. US Unemployment was relatively low in the 1950's and 1960's, averaging about four percent, but it rose through the 1970's and was greater than ten percent in 1982, the highest rate since 1940. The rate was considerably higher among nonwhite minorities and the young, approaching 50 percent among African-American teenagers in urban areas. By 1990, the average unemployment rate had dropped to almost five percent; it fluctuated between five and seven percent in the early 1990's. According to the Bureau of Labor Statistics, the number of persons working or looking for work is projected to increase by 17 million over the 1998 - 2008 period, reaching 155 million in 2008. This 12 percent increase is only slightly lower than the 13 percent increase over the previous ten year period, 1988 - 1998, when the labor force grew by 16 million. For women, the rate of growth in the labor force is expected to slow, but it will still increase at a faster rate than that of men. The share of women in the labor force is projected to increase from 46 percent in 1998 to 48 percent in 2008. The projected labor force growth will be affected by the aging of the baby-boom generation,