SU_ECO2072_W2_A1_Dunn_K

SU_ECO2072_W2_A1_Dunn_K - Unemployment Concerns in the...

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Unformatted text preview: Unemployment Concerns in the Economy By Kimbra Dunn Introduction With the economy constantly growing, many concerns arise with such growth. The most controversial concern with the economy is employment. Employment is when households supply labor to firms which pay wages in return. Unemployment when households supply more labor than is demanded by the firms. The unemployment rate is the most commonly used measure of unemployment. It is the percentage of workers in the labor force who do not have a job (SUO2015). References Mankiw, N. G. (01/2014). Principles of Economics, 7e, 7th Edition. [VitalSource Bookshelf Online]. Retrieved from books/9781305217171 Labor Force Participation Rate Labor force participation rate is the percentage of working age persons in an economy who are employed and unemployed but looking for a job. As of October 2015, the United States labor force participation rate is 62.4%. For the same month in 2008, the amount of United States people working or seeking employment is 66.4%. This is a 4.4% decrease in seven year. This doesn’t necessarily mean that the unemployment rate is increasing nor that the economy is getting worse. The decrease of the labor force participation rate just means that there is an increase in of retired men and women, students, or discouraged workers. Measuring the Unemployment Rate These procedures are developed using statistical models that incorporate current and historical data from the current employment statistic programs (CES) The use of regular state unemployment insurance systems (UI) The third procedure used to determine and measure the unemployment rate is the quarterly census of employment and wages program (QCEW), where the UI systems and the decennial census is used to create estimates of employment and unemployment. Discouraged Workers These are the individuals without jobs that is not actively seeking a job nor has been in the past four weeks. (SUO2015). The unemployment rate does not count discouraged workers because they are not active in the labor force. The exclusion of discouraged workers in the unemployment rate enables inaccurate data to be released. The unemployment rate released does not offer the complete picture of the health of the United States economy. Types of Unemployment Frictional unemployment is the results of taking time to search for the jobs that best suit their skills (Mankiw, N. G. 01/2014). Structural unemployment is the result of the number of jobs available in the labor market is insufficient (Mankiw, N. G. 01/2014). Cyclical unemployment is when workers lose their jobs due to the economic circumstances (Mankiw, N. G. 01/2014). Unemployment Insurance The unemployment insurance (UI) system helps many people who have lost their jobs by temporarily replacing part of their wages. This may help the unemployed but also discourage them from seeking employment. This is because people respond to incentives. Unemployment benefits stop once an individual takes a new job. This may cause the unemployed to devote less effort to job seeking and/or decline an unattractive job offer. Unions A union is a worker association that bargains with employers over wages, benefits, and working conditions (Mankiw, N. G. 01/2014). If a unions raises the wages of some employees, they reduce the quantity demanded for labor. This will cause some individuals to experience unemployment. Making this inequitable because some workers benefit on the expense of other workers. Ultimately hurting the economy. . In an extreme case a “company town” where a single firm controls the hiring, the workers have to take what the firm is offering. Which may be extremely bad. Unions come in to help these workers get paid what they deserve. ...
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