Question

Which of the following statements correctly describe discouraged workers? (If none of the choices apply, leave all of the checkboxes blank.) Check all that apply.

They have not looked for a job in 6 weeks, but they would like a job and are available for work.

They are employed workers who want to earn higher wages.

They are counted as part of the labor force by the Bureau of Labor Statistics.

They have given up on looking for a job.

The following table contains U.S. employment information from February 2011.

Civilian Population	Employed	Unemployed	Discouraged
(Persons 16 years old and over)	(Persons)	(Persons)	(Persons)
238,851,000	139,573,000	13,673,000	1,020,000

The Bureau of Labor Statistics has several measures of joblessness in addition to the official unemployment rate. One alternative is the U-4 measure of labor underutilization, which takes into account discouraged workers and is calculated as follows:

U-4

=

100×Unemployed+DiscouragedLabor Force + Discouraged

Fill in the following table by calculating the official unemployment rate and the U-4 measure of labor under utilization.

Official Unemployment Rate	U-4 Measure of Labor Underutilization
(Percent)	(Percent)
8.92/9.52/9.59/9.80/13.81/14.49	8.92/9.52/9.59/9.80/13.81/14.49

The official unemployment rate and the U-4 measure of labor underutilization are two different measures of joblessness in the economy.

The U-4 measure of labor under utilization is (higher/ lower) than the official unemployment rate.

Answer 1

Which of the following statements correctly describe discouraged workers?

Correct choice: They have given up on looking for a job.

Explanation: Discouraged workers are no longer considered part of the labor force. They have been unemployed for a long time, and have given up looking for a job. In their job search, they were unable to find a job.

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Reasons for other options being incorrect:

They have not looked for a job in atleast 4 weeks, and are not available for work. They are not looking for higher wages, and have left the labor force. They are not counted in the unemployment rate.

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The following table contains U.S. employment information from February 2011.

Civilian Population	Employed	Unemployed	Discouraged
(Persons 16 years old and over)	(Persons)	(Persons)	(Persons)
238,851,000	139,573,000	13,673,000	1,020,000

Here, total labor force = employed + unemployed

= 139,573,000 + 13,673,000

= 153,246,000

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Official unemployment rate = Unemployed / Total Labor Force

U-rate = (13,673,000 / 153,246,000) x 100

U-rate = 8.92%

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U-4 Unemployment Rate:

U-4 rate =

U-4 rate = 9.52%

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Fill in the following table by calculating the official unemployment rate and the U-4 measure of labor under utilization.

Official Unemployment Rate	U-4 Measure of Labor Underutilization
(Percent)	(Percent)
8.92	9.52

The U-4 measure of labor under utilization is higher than the official unemployment rate.