It is the failure to use available resources particularly labor to provide desired goods and services.
Underemployment
not using all of the resources or labor (George Bush high school will be a good example or working less than 24 hours in a week).
Labor Force
- above 16 years of age.
-able and willing to work.
NOT in the Labor Force
1. Military
2. Students
3. Retired people
4. Disabled.
5. Home makers
6. Mental institution
7. Jail/prison.
8. those not looking for a job.
Standard Unemployment rate.
4%-5% = full employment or natural rate of unemployment (NRU)
How to calculate the unemployment rate.
# of unemployed / # of employed + # of unemployed * 100
Types of unemployment.
1. Frictional: those who are searching for a job. Those temporarily unemployed or in between jobs. they have transferable skills. for example college and high school graduates or people that were layed off.
2. Structural: Change in the structure of the labor force makes some skills obsolete . they have to learn new skills in order to get a job.
3. Seasonal: it is due to the time of year and the nature of the job. for example School bus drivers, life guards, Santa clause, Easter bunny impersonators and construction worker.
4. Cyclical: this is unemployment that results from economic downturns such as recessions. as demand falls for goods and services demand for labor falls and workers are laid off.
formula for Natural rate of unemployment (NRU): frictional + structural.
Full employment
This means there is no cyclical unemployment.
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