Unemployment

10 Pages 2554 Words

What is Unemployment? Unemployment is the state of a person who wants to work but does not have a job. The term does not refer to people who are not seeking work because of age, illness, or a mental or physical handicap. Nor does it refer to people who are attending school or keeping house. Such persons are classified as out of the labor force rather than unemployed. Unemployment involved serious problems for both the individual and society as a whole. For the individual it means loss of income, and in many cases, loss of self-respect. For society, it results in lost production and in some cases, criminal or other antisocial behavior. Until the 1900’s, most people considered laziness the main cause of unemployment. But today, they realize that men and women may be out of work through not fault of their own. Why is There Unemployment? Economists experience unemployment because, in most markets in the economy, prices adjust to bring quantity supplied and quantity demanded into balance. In an ideal labor market, wages would adjust to balance the quantity of labor supplied and the quantity of labor demanded. This adjustment of wages would ensure that all workers are always fully employed. Of course, reality does not resemble this ideal. There are always some workers without jobs, even when the overall economy is doing well. In other words, the unemployment rate never falls to zero; instead it fluctuates around the natural rate of unemployment. Measuring Unemployment The Bureau of the Census in the Department of Commerce collects and tabulates unemployment statistics in the United States. The Bureau of Labor Statistics in the Department of Labor analyzes and publishes the statistics. Every month, agents of the bureau visit a certain number of households in all parts of the country. They ask whether the members of each household who are 16 or older have jobs or are looking for work. The answers provide the basis for a monthly estimate of t...