Unemployment

During the middle of any month, specialists
from the Bureau of the Census survey over 50,000 households all over
the country taking count of the number of unemployed. After the
Census workers collect their data, they turn it over to the Bureau of
Labor Statistics for analysis and publication. Unemployment also is
expressed in the terms of the unemployment rate, the number of
unemployed the civilian labor force.

Types of Unemployment

Partially from the data collected by the Bureau
of the Census, economists have identified several different kinds of
unemployment. One kind is frictional unemployment, which accounts
for workers who are “between” jobs. If these workers do not work for
one week between jobs, they can be classified as unemployed.

A second type of unemployment is structural
unemployment, which occurs when a fundamental change in the
operations of the economy reduces the demand for workers and their
skills. Sometimes consumer tastes change and certain goods and
services are no longer required. Also, industries may change the way
they operate. During the 1990-1991 recession, a series of mergers
and cost reductions trimmed the white-collar labor forces in the
banking and computer industries. Sometimes the government contributes
to structural unemployment when it changes the way it does business.
An example would be the closing of a military base.

A third kind of unemployment is cyclical
unemployment, which is directly related to swings in the business
cycle. During a recession many people put off buying certain durable
goods resulting in durable goods industries laying off workers until
the economy recovers.

A fourth kind of unemployment is seasonal
unemployment, which results from changes in the weather of changes in
the demand for certain products. Construction is one of those
industries affected, where carpenters and builders have less work
during the winter than in the summer. Other workers for retail
stores are in demand during the holiday season.

A fifth kind of unemployment is technological
unemployment, which is caused when workers with less skills, talent,

or education are replaced by machines that do their jobs. This
process is often referred to as automation.

Full Employment

Contrary to popular belief, full unemployment
does not mean zero unemployment, it instead means the lowest possible
unemployment rate with the economy growing and all factors of
production being used as efficiently as possible. There has been no
percentage that has been classified as the lowest unemployment rate
because over time the rate of unemployment has fluctuated from 4% to
6% to 9% and then down to 5.1%. If I remember correctly, today our
economy has a 3% unemployment rate- one of the best ever. However,
economists believe that full employment is reached when the
unemployment rate drops below 5%.