Unemployment

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The examples and perspective in this article may not represent a worldwide view of the subject. Please improve this article or discuss the issue on the talk page. (February 2008)

Unemployment occurs when a person is available to work and seeking work but currently without work.^[1] The prevalence of unemployment is usually measured using the unemployment rate, which is defined as the percentage of those in the labor force who are unemployed. The unemployment rate is also used in economic studies and economic indexes such as the United States' Conference Board's Index of Leading Indicators as a measure of the state of the macroeconomics.

Most economic schools of thought agree that the cause of involuntary unemployment is that wages are above the market clearing rate. However, there are disagreements as to why this would be the case: the economists argue that in a downturn, wages stay high because they are naturally 'sticky', whilst others argue that minimum wages and union activity keep them high. Keynesian economics emphasizes unemployment resulting from insufficient effective demand for goods and services in the economy (cyclical unemployment). Others point to structural problems, inefficiencies, inherent in labour markets (structural unemployment). Classical or neoclassical economics tends to reject these explanations, and focuses more on rigidities imposed on the labor market from the outside, such as minimum wage laws, taxes, and other regulations that may discourage the hiring of workers (classical unemployment). Yet others see unemployment as largely due to voluntary choices by the unemployed (frictional unemployment). Alternatively, some blame unemployment on Globalisation. There is also disagreement on how exactly to measure unemployment. Different countries experience different levels of unemployment; traditionally, the USA experiences lower unemployment levels than countires in the European Union,^[2] although there is variet there, with countries like the UK and Denmark outpreforming Italy and France and it also changes over time (e.g. the Great depression) throughout economic cycles.

Contents 1 Types 1.1 Frictional Unemployment 1.2 Classical unemployment 1.2.1 Cyclical or Keynesian unemployment 1.3 Structural unemployment 1.4 Seasonal Unemployment 2 Okun's Law 3 Involuntary unemployment 4 Solutions 4.1 Demand side 4.2 Supply side 4.3 Tax-related 5 Costs of unemployment 5.1 Individual 5.2 Social 6 Historical and Contempory unemployment 7 Measurement 7.1 European Union (Eurostat) 7.2 United States Bureau of Labor Statistics 7.3 Limitations of the unemployment definition 8 Aiding the unemployed 9 Benefits 10 See also 11 References 12 External links

[edit] Types

Though there have been several definitions of voluntary and involuntary unemployment in the economics literature, a simple distinction is often applied. Voluntary unemployment is attributed to the individual's decisions, whereas involuntary unemployment exists because of the socio-economic environment (including the market structure, government intervention, and the level of aggregate demand) in which individuals operate. In these terms, much or most of frictional unemployment is voluntary, since it reflects individual search behavior. On the other hand, cyclical unemployment, structural unemployment, and classical unemployment, are largely involuntary in nature. However, the existence of structural unemployment may reflect choices made by the unemployed in the past, while classical unemployment may result from the legislative and economic choices made by labor unions and/or political parties. So in practice, the distinction between voluntary and involuntary unemployment is hard to draw. The clearest cases of involuntary unemployment are those where there are fewer job vacancies than unemployed workers even when wages are allowed to adjust, so that even if all vacancies were to be filled, there would be unemployed workers. This is the case of cyclical unemployment, for which macroeconomic forces lead to microeconomic unemployment. See also: unemployment types

[edit] Frictional Unemployment

Frictional unemployment occurs when a worker moves from one job to another. While he searches for a job he is experiencing frictional unemployment. This applies for fresh graduates looking for employment as well. This is a productive part of the economy, increasing both the worker's long term welfare and economic efficiency, and is also a type of volentary unemployment. It is a result of imperfect information in the labor market, because if job seekers knew that they would be employed for a particular job vacancy, almost no time would be lost in getting a new job, eliminating this form of unemployment.

Frictional unemployment is always present in an economy, so the level of involentary unemployment is properly the unemployment rate minus the rate of frictional unemployment, which means that increases or deceases in unemployment are normally under-represented in the simple statistics.^[3]

[edit] Classical unemployment

Classical or real-wage unemployment occurs when real wages for a job are set above the market-clearing level. Liberal economists like F.A. Hayek argued that unemployment increases the more the government intervenes into the economy to try to improve the conditions of those with jobs. For example, minimum wages raise the cost of labourers with few skills to above the market equilibrium, resulting in people who wish to work at the going rate but cannot as wage enforced is greater than their value as workers becoming unemployed.^[4][5] They believed that laws restricting layoffs made businesses less likely to hire in the first place, as hiring becomes more risky, leaving many young people unemployed and unable to find work.^[5] Some, such as Murray Rothbard,^[6] suggest that even social taboos can prevent wages from falling to the market clearing level.

[edit] Cyclical or Keynesian unemployment

Cyclical or Keynesian unemployment, also known as demand deficient unemployment, occurs when there is not enough aggregate demand in the economy. This is caused by a business cycle recession, and wages not falling to meet the equilibrium level.

[edit] Structural unemployment

Structural unemployment is caused by a mismatch between jobs offered by employers and potential workers. This may pertain to geographical location, skills, and many other factors. If such a mismatch exists, frictional unemployment is likely to be more significant as well. For example, in the late 1990s there was a tech bubble, creating demand for computer specialists. In 2000-2001 this bubble collapsed. A housing bubble soon formed, creating demand for real estate workers, and many computer workers had to retrain to find employment.

André Gorz believes that structural unemployment could be permanent in modern society, as the microchip revolution and the explosion in computer science and robotising of work even in less developed industrialized countries increase productivity.

Left-wing Nobel Prize winning economist, Paul Krugman has attacked this view, arguing that "One problem capitalism does not suffer from ... is being too productive for its own good."^[7].

“

Productivity gains in steel may reduce the number of jobs in steel, but they create jobs elsewhere (if only by lowering the price of steel, and therefore releasing money to be spent on other things); advanced countries may lose garment industry jobs to developing-country exports, but they gain other jobs producing the goods that those countries buy with their new export income. To observe that productivity growth in a particular industry reduces employment in that same industry tells us nothing about whether productivity growth in the economy as a whole reduces employment in the economy as a whole.[8]

”

[edit] Seasonal Unemployment

Seasonal unemployment results from the fluctuations in demands for labor in certain industries because of the seasonal nature of production.In such industries there is a seasonal pattern in the demand for labor. During the period when the industry is at its peak there is a high degree of seasonal employment, but during the off-peak period there is a high seasonal unemployment.

Seasonal unemployment occurs when an occupation is not in demand at certain seasons.

[edit] Okun's Law

Okun's law states that for every 3% GDP falls relative to potential GDP, unemployment rises 1% (of the total workforce). When the economy operates at productive capacity, it will experience the natural rate of unemployment. ^[9]

U= ^u-h[100(y/yn)-100]

[edit] Involuntary unemployment

Say's law declares that, in time, "markets clear" in an unfettered, unregulated laissez-faire economy: every seller will find a buyer at some strike price, and every buyer will find a seller at some strike price. Sellers and buyers may refuse the strike price but this personal decision is voluntary, which causes the selling or buying to leave the economic model. This theory relies heavily on the absence of government regulation and assumes a developed economy without sabotage where labor strikes, as opposed to strike (mutually agreed upon) prices, are illegal.^{[citation needed]}

Keynes tried to demonstrate in The General Theory of Employment, Interest and Money that Say's law did not work in the real world of the 1930s Depression because of oversaving and private investor timidity, and that in consequence people could be thrown out of work involuntarily without being able to find acceptable new jobs.

This conflict of the neoclassical and Keynesian theories has had strong influence on government policy. The tendency for government is to curtail and eliminate unemployment through increases in benefits and government jobs, and to encourage the job-seeker to both consider new careers and relocation to another city.

Involuntary unemployment does not exist in agrarian societies nor is it formally recognized to exist in underdeveloped but urban societies such as the mega-cities of Africa and of India/Pakistan, given that, in such societies, the suddenly unemployed person must meet his survival needs, by getting a new job quickly at any strike price, entrepreneurship, or joining the invisible economy of the hustler.^[10]

From the narrative standpoint, involuntary unemployment is discussed in the stories by Ehrenreich, the narrative sociology of Bourdieu, and novels of social suffering such as John Steinbeck's Of Mice and Men.

[edit] Solutions

Societies try a number of different measures to get as many people as possible into work. However, attempts to reduce the level of unemployment beyond the Natural rate of unemployment generally fail, resulting only in less output and more inflation^{[citation needed]}.

[edit] Demand side

According to classical economic theory, markets reach equilibrium where supply equals demand; everyone who wants to sell at the market price can. Those who do not want to sell at this price do not; in the labour market this is classical unemployment. Increases in the demand for labour will move the economy along the demand curve, increasing wages and employment. The demand for labour in an economy is derived from the demand for goods and services. As such, if the demand for goods and services in the economy increases, the demand for labour will increase, increasing employment and wages. Monetary policy and fiscal policy can both be used to increase short-term growth in the economy, increasing the demand for labour and decreasing unemployment.

[edit] Supply side

However, the labour market is not efficient: it doesn't clear. Minimum wages and union activity keep wages from falling, which means too many people want to sell their labour at the going price but cannot. Supply-side policies can solve this by making the labour market more flexible. These include removing the minimum wage and reducing the power of unions. Other supply side policies include education to make workers more attractive to employers.

Supply side reforms also increase long-term growth. This increased supply of goods and services requires more workers, increasing employment. It is argued that supply side policies, which include cutting taxes on businesses and reducing regulation, create jobs and reduce unemployment.

[edit] Tax-related

One structural solution to unemployment proposed was a graduated retail tax, or "jobs levy", to firms where labor is more expensive than capital. This method will shift tax burden to capital intensive firms and away from labor intensive firms. In theory this will make firms shift operations to a more politically desired balance between labor intensive and capital intensive production. The excess tax revenue from the jobs levy would finance labor intensive public projects.^[11] However, by raising the value of labour artificially above capital, this would discourage capital investment, the source of economic growth. With less growth, long-run employment would fall.

[edit] Costs of unemployment

[edit] Individual

Unemployed individuals are unable to earn money to meet financial obligations. Failure to pay mortgage payments or to pay rent may lead to homelessness through foreclosure or eviction. Unemployment increases susceptibility to malnutrition, illness, mental stress, and loss of self-esteem, leading to depression. According to a study published in Social Indicator Research, even those who tend to be optimistic find it difficult to look on the bright side of things when unemployed. Using interviews and data from German participants aged 16 to 94 – including individuals coping with the stresses of real life and not just a volunteering student population – the researchers determined that even optimists struggled with being unemployed.^[12]

Dr. M. Brenner conducted a study in 1979 on the "Influence of the Social Environment on Psychology." Brenner found that for every 10% increase in the number of unemployed there is an increase of 1.2% in total mortality, a 1.7% increase in cardiovascular disease, 1.3% more cirrhosis cases, 1.7% more suicides, 4.0% more arrests, and 0.8% more assaults reported to the police.^[13] A more recent study by Christopher Ruhm^[14] on the effect of recessions on health found that several measures of health actually improve during recessions. As for the impact of an economic downturn on crime, during the Great Depression the crime rate did not decrease. Because unemployment insurance in the U.S. typically does not replace 50% of the income one received on the job (and one cannot receive it forever), the unemployed often end up tapping welfare programs such as Food Stamps or accumulating debt. Higher government transfer payments in the form of welfare and food stamps decrease spending on productive economic goods, decreasing GDP.^{[citation needed]}

Some hold that many of the low-income jobs are not really a better option than unemployment with a welfare state (with its unemployment insurance benefits). But since it is difficult or impossible to get unemployment insurance benefits without having worked in the past, these jobs and unemployment are more complementary than they are substitutes. (These jobs are often held short-term, either by students or by those trying to gain experience; turnover in most low-paying jobs is high) Unemployment insurance keeps an available supply of workers for the low-paying jobs, while the employers' choice of management techniques (low wages and benefits, few chances for advancement) is made with the existence of unemployment insurance in mind. This combination promotes the existence of one kind of unemployment, frictional unemployment.^{[citation needed]}

Another cost for the unemployed is that the combination of unemployment, lack of financial resources, and social responsibilities may push unemployed workers to take jobs that do not fit their skills or allow them to use their talents. Unemployment can cause underemployment.

The fear of job loss can spur psychological anxiety.

[edit] Social

An economy with high unemployment is not using all of the resources, i.e. labour, available to it. Since it is operating below its production possibility frontier, it could have higher output if all the workforce were usefully employed. However, there is a trade off between economic efficiency and unemployment: if the frictionally unemployed accepted the first job they were offered, they would be likely to be operating at below their skill level, reducing the economy's efficiency.^[15]

It is estimated that, during the Great Depression, unemployment due to sticky wages cost the US economy about $4 trillion.^{[citation needed]} This is many times larger than losses due to monopolies, cartels and tariffs.^{[citation needed]}

During a long period of unemployment, workers can lose their skills, causing a loss of human capital. Being unemployed can also reduce the life expectancy of workers by about 7 years ^[16]

High unemployment can encourage xenophobia and protectionism as workers fear that foreigners are stealing their jobs.^{[citation needed]} Efforts to preserve existing jobs of domestic and native workers include legal barriers against "outsiders" who want jobs, obstacles to immigration, and/or tariffs and similar trade barriers against foreign competitors.

Finally, a rising unemployment rate concentrates the oligopsony power of employers by increasing competition amongst workers for scarce employment opportunities.^{[citation needed]}.

[edit] Historical and Contempory unemployment

This section is suspect and may represent a minority view.

Preliterate communities treat their members as parts of an extended family and thus do not allow unemployment.^{[citation needed]} In historical societies such as European feudalism, the serfs were never "unemployed" because they had direct access to the land, and the needed tools, and could thus work to produce crops. Just as on the American frontier during the nineteenth century, there were day labourers and subsistence farmers on poor land, whose position in society was somewhat analogous to the unemployed of today. But they were not truly unemployed, since they could find work and support themselves on the land.^{[citation needed]}

The decade of the 1930s saw the Great Depression in the United States and many other countries. In 1929, the U.S. unemployment rate averaged 3%.^[17] In 1933, 25% of all American workers and 37% of all nonfarm workers were unemployed,^[18] with firms unwilling to employ workers at the abnormally high wage rates enforced while output fell.^[19] In Cleveland, Ohio, the unemployment rate was 60%; in Toledo, Ohio, 80%.^[20] Unemployment in Canada reached 27% at the depth of the Depression in 1933.^[21] In some towns and cities in the north east of England, unemployment reached as high as 70%.^[22] In Germany the unemployment rate reached nearly 25% in 1932.^[23] One Soviet trading corporation in New York averaged 350 applications a day from Americans seeking jobs in the Soviet Union.^[24] There were two million homeless people migrating across the United States. One Arkansas man walked 900 miles looking for work.^[20]

Under systems of slave-labor, slave-owners never let their property be unemployed for long. (If anything, they would sell the unneeded laborer.) Planned economies such as the old Soviet Union or today's Cuba typically provide occupation for everyone, using substantial overstaffing if necessary. (This is called "hidden unemployment," which is sometimes seen as a kind of underemployment^{[citation needed]} Workers' cooperatives—such as those producing plywood in the U.S. Pacific Northwest—do not let their members become unemployed unless the co-op itself goes bankrupt.^{[citation needed]}

Even in broadly Capitalist economies, unemployment rates can vary significantly. Relatively lightly regulated labour markets, like those of America, the UK or Denmark, tend to have lower involentary unemployment, though in recessions their unemployment rates can increase very rapidly becuase firms find it easier to law of workers. France, Germany and Italy, with more regulation and stronger unions, tend to have higher involentary unmeployment, though the increases in times of recession tend to be less becuase firms find it harder to lay off workers. Some countries like Spain suffer friom both high normal unemployment and a sharp increase.^[25]

[edit] Measurement

Though many people care about the number of unemployed, economists typically focus on the unemployment rate. This corrects for the normal increase in the number of people employed due to increases in population and increases in the labor force relative to the population. The unemployment rate is expressed as a percentage, and is calculated as follows:

As defined by the International Labour Organization, "unemployed workers" are those who are currently not working but are willing and able to work for pay, currently available to work, and have actively searched for work.^[26] Many countries such as the UK and Sweden have begun counting more people as disabled, reducing their unemployment figures.

Since not all unemployment may be "open" and counted by government agencies, official statistics on unemployment may not be accurate^[27].

The ILO describes 4 different methods to calculate the unemployment rate:^[28]

• Labour Force Sample Surveys are the most preferred method of unemployment rate calculation since they give the most comprehensive results and enables calculation of unemployment by different group categories such as race and gender. This method is the most internationally comparable.
• Official Estimates are determined by a combination of information from one or more of the other three methods. The use of this method has been declining in favor of Labour Surveys.
• Social Insurance Statistics such as unemployment benefits, are computed base on the number of persons insured representing the total labour force and the number of persons who are insured that are collecting benefits. This method has been heavily criticized due to the expiration of benefits before the person finds work.
• Employment Office Statistics are the least effective being that they only include a monthly tally of unemployed persons who enter employment offices. This method also includes unemployed who are not unemployed per the ILO definition.

[edit] European Union (Eurostat)

Eurostat, the statistical office of the European Union, defines unemployed as those persons age 15 to 74 who are not working, have looked for work in the last four weeks, and ready to start work within two weeks, which conform to ILO standards. Both the actual count and rate of employment are reported. Statistical data are available by member state, EU12, EU15, EU25, EU27, EA11, and EA13. Eurostat also includes a long-term unemployment rate. This is defined as part of the unemployed who have been unemployed for an excess of 1 year.^[29]

Three methods of data collection are used in the European Union. The European Union Labour Force Survey (EU-LFS) collects data on all member states each quarter. For monthly calculations, national surveys or national registers from employment offices are used in conjunction with quarterly EU-LFS data. Monthly unemployment rates are interpolated from monthly data from member states to provide "harmonized data."^[30]

At this time Germany's unemployment data are collected separately from the (EU-LFS).

[edit] United States Bureau of Labor Statistics

The Bureau of Labor Statistics measures employment and unemployment (of those over 15 years of age) using two different labor force surveys^[32] conducted by the United States Census Bureau (within the United States Department of Commerce) and/or the Bureau of Labor Statistics (within the United States Department of Labor) that gather employment statistics monthly. The Current Population Survey (CPS), or "Household Survey", conducts a survey based on a sample of 60,000 households. This Survey measures the unemployment rate based on the ILO definition.^[33] The data is also used to calculate 5 alternate measures of unemployment as a percentage of the labor force based on different definitions noted as U1 through U6:^[34]

• U1: Percentage of labor force unemployed 15 weeks or longer.
• U2: Percentage of labor force who lost jobs or completed temporary work.
• U3: Official unemployment rate per ILO definition.
• U4: U3 + "discouraged workers", or those who have stopped looking for work because current economic conditions make them believe that no work is available for them.
• U5: U4 + other "marginally attached workers", or those who "would like" and are able to work, but have not looked for work recently.
• U6: U5 + Part time workers who want to work full time, but can not due to economic reasons.

Note: "Marginally attached workers" are added to the total labor force for unemployment rate calculation for U4, U5, and U6. The BLS revised the CPS in 1994 and among the changes the measure representing the official unemployment rate was renamed U3 instead of U5.^[35]

The Current Employment Statistics survey (CES), or "Payroll Survey", conducts a survey based on a sample of 160,000 businesses and government agencies that represent 400,000 individual employers.^[36] This survey measures only nonagricultural, nonsupervisory employment; thus, it does not calculate an unemployment rate, and it differs from the ILO unemployment rate definition. These two sources have different classification criteria, and usually produce differing results. Additional data are also available from the government, such as the unemployment insurance weekly claims report available from the Office of Workforce Security, within the U.S. Department of Labor Employment & Training Administration.^[37]

These statistics are for the U.S. economy as a whole, hiding variations among groups. For January 2008 in the U.S. the unemployment rates were 4.4% for adult men, 4.2% for adult women, 4.4% for Caucasians, 6.3% for Hispanics or Latinos (all races), 9.2% for African Americans, 3.2% for Asian Americans, and 18.0% for teenagers.^[36]

These percentages represent the usual rough ranking of these different groups' unemployment rates. The absolute numbers change over time and with the business cycle.^[38]

The Bureau of Labor Statistics provides up-to-date numbers via a pdf linked here. The BLS also provides a readable concise current Employment Situation Summary, updated monthly.^[39]

Notes: 1940-2009 data are from Bureau of Labor Statistics^[40]. See also "Historical Comparability" under the Household Data section of the Explanatory Notes at http://www.bls.gov/cps/eetech_methods.pdf. 1890-1930 data are from Romer.^[41] 1930-1940 data are from Coen.^[42] Data prior to 1948 are for persons age 14 and over. Data beginning in 1948 are for persons age 16 and over. See image info for complete data.

[edit] Limitations of the unemployment definition

The unemployment rate may be different from the impact of the economy on people. The unemployment figures indicate how many are not working for pay but seeking employment for pay. It is only indirectly connected with the number of people who are actually not working at all or working without pay. Therefore, critics believe that current methods of measuring unemployment are inaccurate in terms of the impact of unemployment on people as these methods do not take into account the 1.5% of the available working population incarcerated in U.S. prisons (who may or may not be working while incarcerated), those who have lost their jobs and have become discouraged over time from actively looking for work, those who are self-employed or wish to become self-employed, such as tradesmen or building contractors or IT consultants, those who have retired before the official retirement age but would still like to work (involuntary early retirees), those on disability pensions who, while not possessing full health, still wish to work in occupations suitable for their medical conditions, those who work for payment for as little as one hour per week but would like to work full-time. These people are "involuntary part-time" workers, those who are underemployed, e.g., a computer programmer who is working in a retail store until he can find a permanent job, involuntary stay-at-home mothers who would prefer to work, and graduate and Professional school students who were unable to find worthwhile jobs after they graduated with their Bachelor's degrees.

On the other hand, the measures of employment and unemployment may be "too high". In some countries, the availability of unemployment benefits can inflate statistics since they give an incentive to register as unemployed. People who do not really seek work may choose to declare themselves unemployed so as to get benefits; people with undeclared paid occupations may try to get unemployment benefits in addition to the money they earn from their work. Conversely, the absence of any tangible benefit for registering as unemployed discourages people from registering.

However, in countries such as the United States, Canada, Mexico, Australia, Japan and the European Union, unemployment is measured using a sample survey (akin to a Gallup poll). According to the BLS, a number of Eastern European nations have instituted labor force surveys as well. The sample survey has its own problems because the total number of workers in the economy is calculated based on a sample rather than a census.

It is possible to be neither employed nor unemployed by ILO definitions, i.e., to be outside of the "labor force." These are people who have no job and are not looking for one. Many of these are going to school or are retired. Family responsibilities keep others out of the labor force. Still others have a physical or mental disability which prevents them from participating in labor force activities.

Typically, employment and the labor force include only work done for monetary gain. Hence, a homemaker is neither part of the labor force nor unemployed. Nor are full-time students nor prisoners considered to be part of the labor force or unemployment. The latter can be important. In 1999, economists Lawrence F. Katz and Alan B. Krueger estimated that increased incarceration lowered measured unemployment in the United States by 0.17% between 1985 and the late 1990s. In particular, as of 2005, roughly 0.7% of the US population is incarcerated (1.5% of the available working population).

Children, the elderly, and some individuals with disabilities are typically not counted as part of the labor force in and are correspondingly not included in the unemployment statistics. However, some elderly and many disabled individuals are active in the labor market.

In the early stages of an economic boom, unemployment often rises. This is because people join the labor market (give up studying, start a job hunt, etc.) because of the improving job market, but until they have actually found a position they are counted as unemployed. Similarly, during a recession, the increase in the unemployment rate is moderated by people leaving the labor force or being otherwise discounted from the labor force, such as with the self-employed.

For the fourth quarter of 2004, according to OECD, (source Employment Outlook 2005 ISBN 92-64-01045-9), normalized unemployment for men aged 25 to 54 was 4.6% in the USA and 7.4% in France. At the same time and for the same population the employment rate (number of workers divided by population) was 86.3% in the U.S. and 86.7% in France.

This example shows that the unemployment rate is 60% higher in France than in the USA, yet more people in this demographic are working in France than in the USA, which is counterintuitive if it is expected that the unemployment rate reflects the health of the labor market.^{[43] [44]}.

Due to these deficiencies, many labor market economists prefer to look at a range of economic statistics such as labor market participation rate, the percentage of people aged between 15 and 64 who are currently employed or searching for employment, the total number of full-time jobs in an economy, the number of people seeking work as a raw number and not a percentage, and the total number of person-hours worked in a month compared to the total number of person-hours people would like to work. In particular the NBER does not use the unemployment rate but prefer various employment rates to date recessions ^[45].

[edit] Aiding the unemployed

Many countries have aids for the unemployed as part of the social welfare. These unemployment benefits include unemployment insurance, welfare, unemployment compensation and subsidies to aid in retraining. The main goal of these programs is to alleviate short-term hardships and, more importantly, to allow workers more time to search for a job.

In the U.S. the unemployment insurance allowance one receives is based solely on previous income (not time worked, family size, etc.) and usually compensates for one-third of one's previous income. To qualify, one must reside in their respective state for at least a year and, of course, work. The system was established by the Social Security Act of 1935. While 90% of citizens are covered on paper, only 40% could actually receive benefits.^{[citation needed]} In cases of highly seasonal industries the system provides income to workers during the off seasons, thus encouraging them to stay attached to the industry.

Families on relief 1935–41
Relief cases 1936-1941
Monthly average in 1,000

Year	1936	1937	1938	1939	1940	1941
Workers employed
WPA	1,995	2,227	1,932	2,911	1,971	1,638
CCC and NYA	712	801	643	793	877	919
Other federal work projects	554	663	452	488	468	681
Public assistance cases
Social security programs	602	1,306	1,852	2,132	2,308	2,517
General relief	2,946	1,484	1,611	1,647	1,570	1,206
Total families helped	5,886	5,660	5,474	6,751	5,860	5,167
Unemployed workers (Bur Lab Stat)	9,030	7,700	10,390	9,480	8,120	5,560
Coverage (cases/unemployed)	65%	74%	53%	71%	72%	93%

source: Donald S. Howard, WPA and Federal Relief Policy. 1943 p 34.

Year	Unemployment (% labor force)
1933	24.9
1934	21.7
1935	20.1
1936	16.9
1937	14.3
1938	19.0
1939	17.2
1940	14.6
1941	9.9
1942	4.7
1943	1.9
1944	1.2
1945	1.9

source: Historical Statistics US (1976) series D-86

See also welfare and training.

[edit] Benefits

Unemployment may have advantages as well as disadvantages for the overall economy. Notably, it may help avert runaway inflation, which negatively affects almost everyone in the affected economy and has serious long-term economic costs. However the historic assumption that full local employment must lead directly to local inflation has been attenuated, as recently expanded international trade has shown itself able to continue to supply low-priced goods even as local employment rates rise closer to full employment.^{[citation needed]}

The inflation-fighting benefits to the entire economy arising from a presumed optimum level of unemployment has been studied extensively. Before current levels of world trade were developed, unemployment was demonstrated to reduce inflation, following the Phillips curve, or to decelerate inflation, following the NAIRU/natural rate of unemployment theory.^{[citation needed]} since it is relatively easy to seek a new job without losing one's current one. And when more jobs are available for fewer workers (lower unemployment), it may allow workers to find the jobs that better fit their tastes, talents, and needs.

As in the Marxian theory of unemployment, special interests may also benefit: some employers may expect that employees with no fear of losing their jobs will not work as hard, or will demand increased wages and benefit. According to this theory, unemployment may promote general labor productivity and profitability by increasing employers' monopsony-like power (and profits).

Optimal unemployment has also been defended as an environmental tool to brake the constantly accelerated growth of the GDP to maintain levels sustainable in the context of resource constraints and environmental impacts. However the tool of denying jobs to willing workers seems a blunt instrument for conserving resources and the environment -- it reduces the consumption of the unemployed across the board, and only in the short-term. Full employment of the unemployed workforce, all focused toward the goal of developing more environmentally efficient methods for production and consumption might provide a more significant and lasting cumulative environmental benefit and reduced resource consumption.^[46] If so the future economy and workforce would benefit from the resultant structural increases in the sustainable level of GDP growth.

Some critics of the "culture of work" such as anarchist Bob Black see employment as overemphasized culturally in modern countries. Such critics often propose quitting jobs when possible, working less, reassessing the cost of living to this end, creation of jobs which are "fun" as opposed to "work," and creating cultural norms where work is seen as unhealthy. These people advocate an "anti-work" ethic for life.^{[citation needed]}

[edit] See also

• Employment gap
• Employment Protection Legislation
• Employment rate
• FRED (Federal Reserve Economic Data)
• Job guarantee
• Labour market
• List of countries by unemployment rate
• List of U.S. states by unemployment rate
• NAIRU
• Poverty
• Underemployment
• Unemployment benefit
• Waithood
• Workfare
• Youth Exclusion

[edit] References

[edit] External links

• Economic Policy Institute
• Historical data
  • U.S. Unemployment Rate - unemployment rate in US, since 1976, annual data
  • Historical US unemployment rate - since 1948, monthly data
  • The United States Unemployment Rate - unemployment rate in US, since January 1948, monthly data
  • Official Bureau of Labor Statistics chart - unemployment rate and some other statistics for US, since 1940, annual data
• Current data
  • Current unemployment rates by country
  • OECD Unemployment statistics
  • Current United State Unemployment Rate listed by state and updated weekly

v • d • e Employment Classifications Casual/Contingent • Full-time • Part-time • Self-employed/Independent contractor • Temporary Hiring Application • Background Check • Cover letter • Drug testing • Contract • Employment agency • Executive search • Interview • Job hunting • Job fraud • Probation • Recruiter • Résumé • Work-at-home scheme Roles Internship • Job • Numerary • Permanent • Permatemp • Supernumerary • Supervisor • Volunteer Attendance Break • Leave of absence • No call, no show • Sick leave • Workers' compensation Schedules 35-hour workweek • Eight-hour day • Flextime plan • Four-day week • Overtime • Retroactive overtime • Shift work • Telecommuting • Workweek • Working time Wages Living wage • Maximum wage • Minimum wage • Overtime rate • Paid time off • Performance-related pay • Salary • Salary cap Health & safety Ergonomics • Industrial injury • Occupational disease • Sick building syndrome • Work accident • Workplace noise • Workplace stress • Workplace wellness • Work-life balance Infractions Employee handbook • Evaluation • Sexual harassment • Sleeping while on duty • Workplace bullying • Workplace surveillance Willingness Job satisfaction • Workaholic • Work aversion disorder • Work ethic • Working poor Termination At-will employment • Constructive dismissal • Firing • Layoff • Letter of resignation • Resignation • Retirement • Severance package • Types of unemployment • Unemployment • Unemployment benefits • Wrongful dismissal Miscellaneous Overqualification • Underemployment