![\"Flowchart](\"http:\/\/2012books.lardbucket.org\/books\/macroeconomics-principles-v1.0\/section_08\/1a724b5487568e6df8e7e6e4a47024cf.jpg\")
Figure 5.8<\/strong> Computing the Unemployment Rate. A monthly survey of households divides the civilian adult population into three groups. Those who have jobs are counted as employed; those who do not have jobs but are looking for them and are available for work are counted as unemployed; and those who are not working and are not looking for work are not counted as members of the labor force. The unemployment rate equals the number of people looking for work divided by the sum of the number of people looking for work and the number of people employed. Values are for October 2008. All numbers are in thousands.[\/caption]\r\n\r\n<\/div>\r\nThere are several difficulties with the survey. The old survey, designed during the 1930s, put the \u201cAre you working?\u201d question differently depending on whether the respondent was a man or woman. A man was asked, \u201cLast week, did you do any work for pay or profit?\u201d A woman was asked, \u201cWhat were you doing for work last week, keeping house or something else?\u201d Consequently, many women who were looking for paid work stated that they were \u201ckeeping house\u201d; those women were not counted as unemployed. The BLS did not get around to fixing the survey\u2014asking women the same question it asked men\u2014until 1994. The first time the new survey question was used, the unemployment rate among women rose by 0.5 percentage point. More than 50 million women are in the labor force; the change added more than a quarter of a million workers to the official count of the unemployed.For a description of the new survey and other changes introduced in the method of counting unemployment, see Janet L. Norwood and Judith M. Tanur, \u201cUnemployment Measures for the Nineties,\u201d Public Opinion Quarterly<\/em> 58, no. 2 (Summer 1994): 277\u201394.<\/span><\/p>\r\n The problem of understating unemployment among women has been fixed, but others remain. A worker who has been cut back to part-time work still counts as employed, even if that worker would prefer to work full time. 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.<\/p>\r\n The official measures of employment and unemployment can yield unexpected results. For example, when firms expand output, they may be reluctant to hire additional workers until they can be sure the demand for increased output will be sustained. They may respond first by extending the hours of employees previously reduced to part-time work or by asking full-time personnel to work overtime. None of that will increase employment, because people are simply counted as \u201cemployed\u201d if they are working, regardless of how much or how little they are working. In addition, an economic expansion may make discouraged workers more optimistic about job prospects, and they may resume their job searches. Engaging in a search makes them unemployed again\u2014and increases unemployment. Thus, an economic expansion may have little effect initially on employment and may even increase unemployment.<\/p>\r\n\r\n You\u2019ll have more success on the Self Check if you\u2019ve completed the two\u00a0Readings in this section.<\/span><\/p>\r\nUse this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.\r\n\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/515","rendered":" The Bureau of Labor Statistics defines a person as unemployed if he or she is not working but is looking for and available for work. The labor force\u00a0is the total number of people working or unemployed. The unemployment rate\u00a0is the percentage of the labor force that is unemployed.<\/p>\n To estimate the unemployment rate, government surveyors fan out across the country each month to visit roughly 60,000 households. At each of these randomly selected households, the surveyor asks about the employment status of each adult (everyone age 16 or over) who lives there. Many households include more than one adult; the survey gathers information on about roughly 100,000 adults. The surveyor asks if each adult is working. If the answer is yes, the person is counted as employed. If the answer is no, the surveyor asks if that person has looked for work at some time during the previous four weeks and is available for work at the time of the survey. If the answer to that question is yes, the person is counted as unemployed. If the answer is no, that person is not counted as a member of the labor force. Figure 5.8 “Computing the Unemployment Rate” shows the survey\u2019s results for the civilian (nonmilitary) population for October 2008. The unemployment rate is then computed as the number of people unemployed divided by the labor force\u2014the sum of the number of people not working but available and looking for work plus the number of people working. In October 2008, the unemployment rate was 6.5%.<\/p>\n Figure 5.8<\/strong> Computing the Unemployment Rate. A monthly survey of households divides the civilian adult population into three groups. Those who have jobs are counted as employed; those who do not have jobs but are looking for them and are available for work are counted as unemployed; and those who are not working and are not looking for work are not counted as members of the labor force. The unemployment rate equals the number of people looking for work divided by the sum of the number of people looking for work and the number of people employed. Values are for October 2008. All numbers are in thousands.<\/p>\n<\/div>\n<\/div>\n There are several difficulties with the survey. The old survey, designed during the 1930s, put the \u201cAre you working?\u201d question differently depending on whether the respondent was a man or woman. A man was asked, \u201cLast week, did you do any work for pay or profit?\u201d A woman was asked, \u201cWhat were you doing for work last week, keeping house or something else?\u201d Consequently, many women who were looking for paid work stated that they were \u201ckeeping house\u201d; those women were not counted as unemployed. The BLS did not get around to fixing the survey\u2014asking women the same question it asked men\u2014until 1994. The first time the new survey question was used, the unemployment rate among women rose by 0.5 percentage point. More than 50 million women are in the labor force; the change added more than a quarter of a million workers to the official count of the unemployed.For a description of the new survey and other changes introduced in the method of counting unemployment, see Janet L. Norwood and Judith M. Tanur, \u201cUnemployment Measures for the Nineties,\u201d Public Opinion Quarterly<\/em> 58, no. 2 (Summer 1994): 277\u201394.<\/span><\/p>\n The problem of understating unemployment among women has been fixed, but others remain. A worker who has been cut back to part-time work still counts as employed, even if that worker would prefer to work full time. 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.<\/p>\n The official measures of employment and unemployment can yield unexpected results. For example, when firms expand output, they may be reluctant to hire additional workers until they can be sure the demand for increased output will be sustained. They may respond first by extending the hours of employees previously reduced to part-time work or by asking full-time personnel to work overtime. None of that will increase employment, because people are simply counted as \u201cemployed\u201d if they are working, regardless of how much or how little they are working. In addition, an economic expansion may make discouraged workers more optimistic about job prospects, and they may resume their job searches. Engaging in a search makes them unemployed again\u2014and increases unemployment. Thus, an economic expansion may have little effect initially on employment and may even increase unemployment.<\/p>\n Answer the question(s) below to see how well you understand the topics covered in the previous section. This short quiz does not<\/strong> count toward your grade in the class, and you can retake it an unlimited number of times.<\/p>\n You\u2019ll have more success on the Self Check if you\u2019ve completed the two\u00a0Readings in this section.<\/span><\/p>\n Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.<\/p>\n \tSelf Check: Critiquing the Unemployment Rate<\/h2>\r\nAnswer the question(s) below to see how well you understand the topics covered in the previous section. This short quiz does not<\/strong> count toward your grade in the class, and you can retake it an unlimited number of times.\r\n
Measuring Unemployment<\/h2>\n
<\/p>\nSelf Check: Critiquing the Unemployment Rate<\/h2>\n