Unemployment
How is unemployment calculated, and what is and is not included?
The unemployment rate starts with a monthly survey conducted by the Bureau of Labor Statistics (BLS). The survey consists of 55,000 households that reflect the population characteristics of the U.S. Once the survey is completed the BLS determines the labor force (Employed + Unemployed), the Labor force participation rate (Number of individuals in the labor force/the Population (this includes ages 16 and over)) and the unemployment rate (Number unemployed/Number of individuals in the labor force) (Gwartney, J. A., Stroup, R. L., Sobel, R. L., & Macpherson, D. A. 2018).
Unemployment calculations include employed individuals (ages 16 and above that have worked at least 1 hour for pay/profit during the survey week, worked 15 hours or more without pay in a family-operated business or have a job but did not work during the survey week), unemployed individuals (those that do not have a job, are available to work and have actively looked for work during the past four weeks) (Gwartney, J. A., Stroup, R. L., Sobel, R. L., & Macpherson, D. A. 2018).
The calculations do not factor in illegal employment activities/relationships (working under the table) or household (homemaker) activities.
What were the unemployment numbers for the latest three quarters?
US Unemployment Rate – 2021 Q4 – 4.20%
2021 Q3 – 5.10%
2021 Q2 – 5.90%
Source: US Unemployment Rate. (N.D.) Retrieved from https://ycharts.com/indicators/us_unemployment_rate_quarterly
Why is unemployment mentioned in business news so often and used as an important metric for our economy?
The unemployment rate is a metric that represents a snapshot of the available workforce. Similar to GDP it provides insight into the health of an economy. Assuming the market is left to adjust on its own, a low unemployment rate signals a growing economy in which the demand for labor exceeds the supply. Conversely, a high or growing unemployment rate may signal an excess supply of labor and a contracting economy.
What might cause the unemployment numbers to be questioned from an accuracy standpoint and a relevancy perspective?
Unemployment numbers and their relevance can be questioned for several reasons. The criteria for employed vs. unemployed does not factor in all scenarios. Examples are students, retirees, seasonal workers or those working off the books.
How is unemployment impacted by the phases of the business cycle?
The business cycle is a significant contributing factor to unemployment. As a company grows and needs workers the demand reduces the available labor supply. Conversely, a business facing a contractionary period with a reduced demand for workers would increase the national labor pool thereby increasing the unemployment rate.
This is not limited to growing and contracting businesses. Seasonal cycles produce the same effect increasing demand for retail workers during the holidays and reducing the demand during the off-season. Another example is oil workers in northern climates. During the winter, some regions are too harsh to work; therefore, the workers are laid off until spring when the work becomes feasible.
References:
Gwartney, J. A., Stroup, R. L., Sobel, R. L., & Macpherson, D. A.(2018). Macroeconomics: Private and public choice (16th ed.). Retrieved from https://www.cengage.com (Links to an external site.)
US Unemployment Rate. (N.D.) Retrieved from https://ycharts.com/indicators/us_unemployment_rate_quarterly
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Question 
Prior to beginning work on this discussion,
Unemployment
Read Chapter 8 of Macroeconomics: Private and Public Choice.
For this discussion, address the following questions:
How is unemployment calculated, and what is and is not included?
What were the unemployment numbers for the latest three quarters?
Why is unemployment mentioned in business news so often and used as an important metric for our economy?
What might cause the unemployment numbers to be questioned from an accuracy standpoint and a relevancy perspective?
How is unemployment impacted by the phases of the business cycle?
Your initial response should be a minimum of 200 words. Graduate school students learn to assess the perspectives of several scholars. Support your response with at least one scholarly and/or credible resource in addition to the text.
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