Let’s get this out of the way. Who YOU think is unemployed, who the BLS thinks is unemployed, and who receives unemployment compensation are three different groups with lots of overlap.
Your definition of unemployed might be indicated by the circle.
The BLS could be the triangle.
The rectangle being those receiving unemployment compensation.
The over-lap of the three is striped.
What kind of numbers are involved in calculating the different unemployment statistics?
With that introduction…here we go.
Unemployed does not just mean “without a job”.
There are 6 criteria that must be met to be counted as U-3* unemployed by the Bureau of Labor Statistics
*The BLS has 6 measurements of unemployment. U-1 being the narrowest definition of unemployed,and U-6 the most inclusive of unemployed. U-3 in the middle is what the AP uses without ever mentioning it.
You are not unemployed IF YOU ARE:
1. under the age of 16.
2. not looking for a job.
3. expected to be recalled (weather, strike, etc).
4. starting a new job with in 30 days.
5. working at least 1 hr/wk for pay.
6. working at least 15 hrs/wk as a volunteer or in a family business.
AP exam uses these.
Once a person is counted as unemployed their unemployment is classified as one of three types of unemployment
Cyclical unemployment: your job disappeared due to a nation-wide slow down.
Frictional unemployment: all others. Typically you are between two stages of your life: a job change, entering labor force (new graduate), reentering labor force (children are now in school, retired and now unretired).
Those living in the northern tier of states know that road, house, and many other types of building stops about November 15th each year not to restart until after March 1.
You might think of this as ‘mini-cyclical unemployment’ but don’t use the word cyclic as it is reserved and used to describe business cycle caused fluctuations in unemployment.
What does the AP exam test? Easier to say what it won’t. It will not test US specific information. Think of the AP exam as an international exam. They will ask about types of unemployment but not the agency that measures it, nor nation specific unemployment rates.
US data…most macro data are solid starting as of 1947. Anything prior maybe good but was constructed after the fact.
Next slide…is a perfect example of both, US specific and post-1946.
The rise from 1965 to 1988 is attributable to a higher rate of women in the labor force and baby boomers coming of age. A good portion of the decline since 2008 is the exiting of the baby boomers.
Discouraged worker: it is not uncommon for a person who has been unemployed for a along time, to stop looking for employment and dropout of the labor force.
#1. Losing a job is depressing enough.
#2. Looking for work, and being turned down is VERY depressing.
Duration of Unemployment:
The average length of time, measured in weeks, between when a person loses their job and when they again find employment.
Roughly speaking, if the duration of unemployment doubles, the unemployment rate will also double.
While the AP exam might use the phrase ‘Duration of Unemployment’ I can not find an example where it was the focus of a multiple choice question. A few textbooks define it and not much more, so AP testing? Probably, NO.
Duration of Unemployment
Non-AP, but gives you an historic view.
This describes a worker employed at a job requiring significantly less than that worker’s skill level.
We like to think of a Philosophy PhD driving a taxi or a college grad bagging groceries.