Part 1: The Unemployment Rate (weight 30% of the assignment grade) Complete the
ID: 1168525 • Letter: P
Question
Part 1: The Unemployment Rate (weight 30% of the assignment grade)
Complete the following exercise
Visit the Bureau of Labor Statistics Web Site,
www.bls.gov/news.release/empsit.toc.htm . Select Employment Situation Summary.
Write a report (1-2 pages double - spaced) to answer the questions:
What month (and year) is summarized? What was the unemployment rate for that month? How does that rate compare with the rate in the previous month?
What were the unemployment rates for adult women, teenagers, blacks, Hispanics, and whites? How did these rates compare with those a month earlier?
What factors make it difficult to determine the unemployment rate?
Why is unemployment an economic problem?
What are the noneconomic effects of unemployment?
Who loses from unemployment?
Explanation / Answer
The Bureau of Labor Statistics summarizes the unemployment scenario for August, 2015. The unemployment rate in August, 2015, is 5.1%, down from 5.3% in July, 2015. From July, 2015, to August, 2015, the unemployment rate declined for the adult women from 4.9% to 4.7%. It declined for Hispanics from 6.8% to 6.6%, for whites from 4.6% to 4.4%. The unemployment rate rose for blacks from 9.1% to 9.5% and for teenagers from 16.2% to 16.9%.
Measurement problem
There are some problems in measuring unemployment, due to which the official figures almost never give an accurate picture of the unemployment situation. Many who are actually working are counted as unemployed. Many people who are counted as unemployed are actually not completely unemployed because they undertake many household chores, which they, had they not been unemployed, would delegate to others. Apart from that, some people work in the underground economy but claim to be unemployed, to obtained unemployment benefits such as unemployment allowance.
There are those who are not looking for work because they think they will not be able to find work, whereas they would take a job if they were given one. Such people are referred to as discouraged workers and are not included in the labor market. But these people are also unemployed. Their non-inclusion in the labor market results in underestimation of unemployment rate.
Who loses from unemployment?
A basic (natural) rate of unemployment is important for smooth functioning of an economy, as people keep switching jobs, and that is necessary for an efficient allocation of resources. But an unemployment rate higher than the natural rate of unemployment should be a cause of concern for all, including those who are employed (and are, thus, seemingly unaffected). A rise in unemployment rate takes its toll on the bargaining power of the labor force and thus the labor force loses on a whole. Due to the negative social effects of unemployment, the society also loses on a whole. But those who are unemployed lose more than others. Unemployed people not only have a low living standard, but they also go through, as surveys after surveys have shown, trauma, stress, and trauma more than the employed.
Why is unemplyment a problem?
According to many economists, a high unemployment rate is a proof that something is going wrong in the economy. An undeniable fact about unemployment is that it implies a waste of resources, which could otherwise be used for the production of output and thus the prosperity of the nation. Moreover, when human beings don’t work, they acquire a less number of new skills and their existing skills erode. Therefore, unemployment also implies erosion of human capital.
Apart from that, there are also non-economic effects of unemployment. High unemployment rates are correlated with high rates of crime, high rates of alcoholism, and low rates of happiness.