August913CivilianWorking-Age PopulationWorking-agepopulation245.9millionLaborforceNot iniabor force155.5million90.4millionEmployedNotavailableAvailableforUnemployedforworkworkbutnot144.2million11.3million(homemakerscurrentlyretirees,full.workingtime students,etc.)6.3million84.1millionDiscouragedNotcurrentlyDiscouraged workers:Peoplelookingbecauseworkersof childcarewho are availablefor work.but0.9millionresponsibilitiesortransportationorotherproblemshave not looked for a job during5.4millionthepreviousfourweeksbecausethey believe no jobs are availableFigure 9.1The employment status ofthe civilianworking-agefor them.population,August2013@2015PearsonEducation,Inc.6
© 2015 Pearson Education, Inc. 6 August 913 Civilian Working-Age Population Discouraged workers: People who are available for work, but have not looked for a job during the previous four weeks because they believe no jobs are available for them. The employment status of the civilian working-age population, August 2013 Figure 9.1
UnemploymentRateBased on the CPS estimates.we calculateseveralimportantmacroeconomic indicators.LaborforceThe most-watched is theunemployment rate:155.5millionNumber of unemployed×100 = Unemployment rateLabor force11.3 millionEmployedUnemployedx100=7.3%155.5 million11.3million144.2millionThismost-commonmeasureFigure 9.1The employment status ofof unemployment is knownthe civilian working-ageformallyasBLSseriesU-3population,August2013@2015PearsonEducation,Inc
© 2015 Pearson Education, Inc. 7 Unemployment Rate The employment status of the civilian working-age population, August 2013 Figure 9.1 Based on the CPS estimates, we calculate several important macroeconomic indicators. • The most-watched is the unemployment rate: 100 Unemployment rate Labor force Number of unemployed = 100 7.3% 155.5 million 11.3 million = This most-common measure of unemployment is known formally as BLS series U-3
Labor Force Participation and Employment-PopulationAlso important are the laborforceparticipation rate (the percentage ofWorking-agepopulationthe working-age population in the labor245.9millionforce)...Labor forcex100=Laborforceparticipation rateWorking - age populationLaborforce155.9million×100=63.2%155.5million245.9 million. and the employment-populationratio (the percentage of the workingEmployedage population that is employed):144.2millionEmployment×100 = Employment-population ratioWorking - age population144.2 million×100=58.6%Figure9.1The employment status of245.9 millionthe civilian working-agepopulation,August2013@2015Pearson Education,Inc.8
© 2015 Pearson Education, Inc. 8 Labor Force Participation and Employment-Population Also important are the labor force participation rate (the percentage of the working-age population in the labor force). 100 Labor force participation rate Working - age population Labor force = 100 63.2% 245.9 million 155.9 million = . and the employment-population ratio (the percentage of the workingage population that is employed): 100 Employment- population ratio Working - age population Employment = 100 58.6% 245.9 million 144.2 million = The employment status of the civilian working-age population, August 2013 Figure 9.1
Problems withMeasuring the Unemployment RateThe unemployment rate measured by the BLS is not a perfectmeasure of joblessness. Why?It mayunderstateunemployment:Distinguishingbetweenpeople who are unemployed and not inthelabor force requires judgment (should we exclude “discouragedworkers"?)Only measures employment, not intensity of employment (full-timevs. part-time; some people are underemployed)It may overstate unemployment:: People might claim falsely to be actively looking for work. May claim not to be working to evade taxes or keep criminalactivityunnoticed92015PearsonEducation,Inc
© 2015 Pearson Education, Inc. 9 Problems with Measuring the Unemployment Rate The unemployment rate measured by the BLS is not a perfect measure of joblessness. Why? It may understate unemployment: • Distinguishing between people who are unemployed and not in the labor force requires judgment (should we exclude “discouraged workers”?) • Only measures employment, not intensity of employment (full-time vs. part-time; some people are underemployed) It may overstate unemployment: • People might claim falsely to be actively looking for work • May claim not to be working to evade taxes or keep criminal activity unnoticed
Alternative Measures of Unemployment:U-6UnemploymentBroadermeasurerateofunemployment18%1614121086Officialmeasureof8unemployment20200020022004200820101996199820062012Some people suggest that we should includeFigure 9.2discouragedworkersandunderemployedworkersinThe officialunemployment ratethe unemployment statistics, to create a broaderandabroadmeasuremeasure of unemployment.oftheunemploymentrate,1996-2013The BLS measures this, calling it BLS series U-610@2015PearsonEducation,lnc
© 2015 Pearson Education, Inc. 10 Alternative Measures of Unemployment: U-6 Some people suggest that we should include discouraged workers and underemployed workers in the unemployment statistics, to create a broader measure of unemployment. • The BLS measures this, calling it BLS series U-6. The official unemployment rate and a broad measure of the unemployment rate, 1996-2013 Figure 9.2