8.1 Defining and Computing Unemployment Rate and Patterns in Unemployment

Which of the following best describes the labor force?

those who are employed along with those who are unemployed

those who are not working and not looking for work

those who are out of work and actively looking for a job

those who are currently working for pay

those who are employed along with those who are unemployed

The labor force is defined as the number of people employed plus the number of people unemployed. 

The size of the labor force and the unemployment rate in the U.S. are measured and tracked by the Bureau of Labor Statistics through a monthly survey which asks a series of questions to divide the adult population into employed, unemployed, or not in the labor force.

If the number of unemployed people actively seeking work is 10.4 million, and the number of employed people is 111.3 million, what is the unemployment rate? Round the answer to the nearest tenth.

8.5%
10.4/121.7×100=8.5%

Jackie works for the Bureau of Labor Statistics in Country Y. The data she collected is listed below:

Population (adult work-aged) Country Y: 9,600,530

Labor Force Country Y: 4,555,235

What is the labor force participation rate? 

(round your answer to the nearest 10th)

47.4%

To solve for the labor force participation rate follow the steps below:

Step 1. Divide the number of people in the labor force (4,555,235 ) by the total adult (working-age) population (9,600,530).

Percentage in the labor force=4,555,235/9,600,530=.474

Step 2. Multiply by 100 to obtain the percentage.

Percentage in the labor force=(100)×(0.474)=47.4%

If there are 56 million unemployed and 200 million employed people in Country N, what is the labor force participation rate if Country N's total adult working-age population is 389 million people? (round your answer to the nearest 10th)

65.8%

To solve for the labor force participation rate follow the steps below:

Step 1. Divide the number of people in the labor force by the total adult (working-age) population (389 million). To solve for the total labor force add the employed (200 million) to the unemployed (56 million) which equals 256 million. Now solve for the labor force participation rate.

Percentage in the labor force=256/389=.658

Step 2. Multiply by 100 to obtain the percentage.

Percentage in the labor force=(100)×(0.658)=65.8%

All of the following are potential examples of hidden unemployment, except:

Select the correct answer below:

someone who has found part-time work but is looking for full-time work

someone with a graduate degree who is working as a waiter

someone who has a full-time job but wants to look for a job with more upward mobility

someone who is so discouraged by unemployment that she stops looking for work

someone who has a full-time job but wants to look for a job with more upward mobility

Hidden unemployment covers people who are mislabeled as employed, unemployed, or out of the labor force. Someone who has a graduate degree but is working retail is considered underemployed and falls under this umbrella. Someone with part-time work who is looking for full-time work could be incorrectly labeled as employed, although they are not employed in the way they would like or need to be. Someone who has quit looking for work because she is discouraged could be mislabeled as out of the labor force.

True or false?

The Current Population Survey (CPS) measures the percentage of the labor force that is unemployed, as well as how a person came to be unemployed.

True

The CPS includes information about unemployment, including the percentage of people who are unemployed and how they came to be unemployed. Additionally, the CPS includes information about whether the unemployed person is the only wage earner in the family.

All of the following statements about the US unemployment rate by gender, race, and ethnicity are true, except:

Select the correct answer below:

During the 2008-2009 recession and in the immediate aftermath, the unemployment rate for men exceeded the unemployment rate for women.

The unemployment rate for African-Americans is slightly lower than the rate for other racial or ethnic groups.

Unemployment rates for African-Americans and Hispanics were at the lowest levels for several decades until the mid-2000s before rising during the recent Great Recession.

Before 1980 the unemployment rate for women was higher than that for men.

The unemployment rate for African-Americans is slightly lower than the rate for other racial or ethnic groups.

The US unemployment rate for African-Americans is substantially higher than the rate for other racial or ethnic groups, a fact that surely reflects, to some extent, a pattern of discrimination that has constrained African-Americans’ labor market opportunities.

According to the table below by the Bureau of Labor Statistics (data from January 2017 (bls.gov)), all of the following are considered unemployed, except:

retirees

people who are unemployed temporarily

people who quit their jobs before having found new jobs

new college graduates who enter the labor market and are currently without jobs

retirees

Retirement is not considered a reason for unemployment by the Bureau of Labor Statistics. All the other examples reflect categories listed in the table.

Charles volunteers at a local soup kitchen for approximately 15 hours per week. He is currently not seeking paid work. Is Charles considered unemployed?

No

The unemployed are defined as those who are out of work and actively looking for a job. Charles is not considered to be unemployed because he is not actively seeking paid work. Charles is considered not to be part of the labor force at all because he is out of paid work and not actively looking for a job.

Assume that the total working-age population of a country is 121.6 million. If 50.8 million people are not in the labor force and 67.4 million people are employed, what is the unemployment rate? Round your answer to the nearest tenth.

3.4/70.8×100=4.8%

Discouraged workers are included in ___________________.

Select the correct answer below:

the underemployed category

the unemployed category

the employed category

none of the above

none of the above

A person who is out of work, would like to work, has looked for work in the past year, and is available for work, but who has given up looking, is considered a discouraged worker. Discouraged workers are not counted as unemployed, but a tally is kept each month of the number of discouraged workers. They are not part of the labor force since they are not considered employed or unemployed.

If the total adult working population of Country X is 450 million, the number of unemployed people is 95 million, and the number of employed people is 245 million, what is the labor force participation rate? Round your answer to the nearest tenth.

75.6%

To solve for the labor force participation rate follow the steps below:

Step 1. Divide the number of people in the labor force by the total adult (working-age) population (450 million). To solve for the total labor force add the employed (245 million) to the unemployed (95 million) which equals 340 million. Now solve for the labor force participation rate.

Percentage in the labor force=340/450=.756

Step 2. Multiply by 100 to obtain the percentage.

Percentage in the labor force=(100)×(0.756)=75.6%

____________ workers tend to have higher unemployment rates than _____________ workers.

Select the correct answer below:

More educated; less educated

Younger; middle-aged

White; hispanic

Older; younger

Younger; middle-aged

Younger workers tend to have higher unemployment, while middle-aged workers tend to have lower unemployment, probably because the middle-aged workers feel the responsibility of needing to have a job more heavily.

When looking at the unemployment rates for various countries, which of the following is not a reason why cross-country comparisons need to be treated carefully?

Select the correct answer below:

Each country has a slightly different definition of unemployment.

Each country has slightly different survey tools for measuring unemployment.

The labor markets vary by country.

A handful of countries have an unemployment rate of 0%

A handful of countries have an unemployment rate of 0%.

We need to treat cross-country comparisons of unemployment rates with care, because each country has slightly different definitions of unemployment, survey tools for measuring unemployment, and also different labor markets.

The establishment payroll surveys generates payroll employment estimates based on all of the following, except:

Select the correct answer below:

number of employees

average weekly hours worked

average hourly, weekly, and overtime earnings

number of underemployed employees

number of underemployed employees

The Bureau of Labor Statistics' establishment payroll survey generates payroll employment estimates by the following criteria: all employees, average weekly hours worked, and average hourly, weekly, and overtime earnings.

Which of the following is an example of how the U.S. Bureau of Labor Statistics may overstate the unemployment rate?

(Select all that apply. Hint: There are two correct answers.)

Select all that apply:

Some people do not have jobs and would be available to work, but are discouraged by the lack of available jobs in their area and have stopped looking.

Some people decide to leave their jobs to be stay at home parents.

People may tell the Census Bureau that they are ready to work and looking for a job but, truly, they are not that eager to work and are not looking very hard at all.

People may have a job, perhaps doing something like yard work, child care, or cleaning houses, but are not reporting the income earned to the tax authorities.

People may tell the Census Bureau that they are ready to work and looking for a job but, truly, they are not that eager to work and are not looking very hard at all.

People may have a job, perhaps doing something like yard work, child care, or cleaning houses, but are not reporting the income earned to the tax authorities.

People may tell the Census Bureau that they are ready to work and looking for a job but, truly, they are not that eager to work and are not looking very hard at all. They are counted as unemployed, although they might more accurately be classified as out of the labor force. Still other people may have a job, perhaps doing something like yard work, child care, or cleaning houses, but are not reporting the income earned to the tax authorities. They may report being unemployed, when they actually are working.