Chapter Twenty-Three:

Employment and Unemployment

Paid Work and Unemployment in the United States

Are you:•Under age 16?•In an institution?•On active duty in the military?

Did you:•Work at all last week for pay or profit?•Work 15 hours or more in a family business?

•Have you been actively searching for work?•Are you available to start a job?

NOT SURVEYED BY THE BUREAU OF LABOR STATISTICS

70.7 million

EMPLOYED

143.5 million

UNEMPLOYED

12.0 million

NOT IN THE LABOR FORCE89.3 million

“Yes” to any question

“Yes”to either question

“Yes”to both questions

“No” to all questions in Box A

“No” to both questions in Box B

“No” to either question in Box C

LABORFORCE

155.5 million

A

B

C

Figure 22.1: Who is in the Labor Force?

Source: BLS News Release, “The Employment Situation—February 2013,” March 8, 2013; U.S. Census Bureau Current Population Clock.

Table 22.1: Unemployment Rates for Different Groups

Source: BLS News Release, “The Employment Situation—February 2013,” March 8, 2013. a People are allowed to indicate more than one racial group. However, data from people who indicated more than one race are not included in these statistics.

Women

Men

Figure 22.2: Male and Female Labor Force Participation Rates, Aged 24 to 54, 1948-2012

Sources: Mosisa, Abraham, and Steven Hipple, “Trends in Labor Force Participation in the United States,” BLS Monthly Labor Review, p. 35–57, October 2006; BLS 2013 Employment and Earnings Online, Household Survey Data, Table 3; various editions of the Statistical Abstract of the United States

Unemployment

1969-1970

1973-1975

1980 1981-1982

1990-1991

2001 2007-2009

Un

emp

loym

ent

Rat

e

Figure 22.3: The Monthly Unemployment Rate in the United States, 1969-2013

Source: U.S. Bureau of Labor Statistics online database

Unemployment Rate

Average Duration of Unemployment

Figure 22.4: Average Duration of Unemployment and Unemployment Rate, 1970-2012

Source: U.S. Bureau of Labor Statistics online database

Theories of Employment, Unemployment, and Wages

Demand

Wage

Quantity of Labor

Supply

WE

LE

Figure 22.5a: The Classical Labor Market Model

Demand

Wage

Quantity of Labor

Supply

LSLD

W*

Labor Surplus (Unemployment)

Figure 22.5b: Unemployment in the Classical Labor Market Model

Real Nonfarm Labor Productivity (1947=1)

Real Nonfarm Hourly Wages (1947=1)

Figure 22.6: Real Nonfarm Median Wages and Labor Productivity, 1947-2012

Source: U.S. Bureau of Labor Statistics, Labor Productivity and Costs online database