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 non-economic effects of unemployment?

Who loses from unemployment?

Answer 1

1)

(a) September 2015 data are summarized.

(b) Unemployment rate for Sept 2015 = 5.1% (Mentioned in data)

(c) Unemployment rate in August = 5.1% (Since data states Sept unemployment rate is unchanged)

(2) Unemployment rates for:

(a) Adult women: 4.6%

(b) Teenagers: 16.3%

(c) Blacks: 9.2%

(d) Hispanics: 6.4%

(e) Whites: 4.4%

In August, these unemployment rates were almost the same as the data mentions.

(3)

Unemployment consists of frictional unemployment which includes job-seekers looking for a job in between two jobs and college pass-outs looking for jobs. The exact data on how many eligible people are sincerely looking for a job cannot be always ascertained, which may understate the true unemployment rate.

Secondly, often part-time jobs are excluded from unemployment rate since much information does not exist.

Thirdly, underemployment is an important factor in job market which is excluded from unemployment rate calculation, which understates the true rate.

(4)

Unemployment is an economic problem because it directly affects the purchasing power of public. Once unemployed, the concerned persons consume less since they have less money to consume. Consumption demand falls and leads to a decrease in aggregate demand, which lowers GDP and economic growth rate.

(5)

Non-economic effects are emotional, social and psychological. Joblessness creates an emotional trauma about one's self-worth. The society may underestimate or undermine the unemployed, lowering their self-esteem. Finally, remaining unemployed for long can create psychological problems in the sufferer's mind.

(6)

The unemployed public and the government both lose from unemployment. The public loses for obvious reasons: The financial and non-financial factors described above. The government makes a double loss: Its tax revenue decreases (since now lower number of people has income that is taxable), but it has to pay more unemployment benefits. So it is a double-edged sword.