Question

1. Are all people over 18 who are not working counted as unemployed by the Bureau of Labor and Statistics? Explain.

2. Is the decrease in the unemployment rate always a good thing? Explain.

3. Is zero unemployment a desirable outcome? Explain.

Answer 1

1.

No. Simply getting over 18 years, does not make people unemployed as per the BLS. When a person over 18, actively searches for the job in the last 4 weeks, available for the work and willing to work but not getting  the job, is considered as unemployed person by the BLS.

2.

No, it may not be the good thing. Decrease in unemployment can be due to the unemployed workers getting discouraged workers and getting out of the labor force figure. It will decrease the unemployment rate. But, it is not good for the economy where people are discouraged and pessimistic about the economy and its labor market.

3.

It is not a desirable outcome, because there will always be people who will be trying to get a better job and there will be people who will get unemployed due to structural changes. If these types of unemployment become zero, then economy does not grow, people are not ambitious and technological development is not taking place in the economy. So, it is not a desirable condition. Besides, it will increase the demand pull inflation and price level will rise, in a scenario of 0% unemployment.