Labor Force Concepts

Why do we collect statistics on the unemployed? When workers are unemployed, they, their families, and the country as a whole lose. Workers and their families lose wages, and the country loses goods and services, which could have been produced. In addition, the purchasing power of these workers is lost, which can lead to unemployment for yet other workers. To know about the extent and nature of unemployment requires information. How many people are unemployed? Who is counted as unemployed? How did they become unemployed? How long have they been unemployed? Are the unemployment numbers growing or declining? These statistics are collected and interpreted along with other economic data and are used by policymakers in making decisions that influence the course of the economy.
What are the basic concepts of Employed and Unemployed? Employed persons consist of:	Download a Labor Force Composition Chart (pdf)
• All persons who did any work for pay or profit during the survey week (the week of the 12th of the month). • All persons who did at least 15 hours of unpaid work in a family-operated business. • All persons who were temporarily absent from their regular jobs because of illness, vacation, bad weather, industrial dispute, or various personal reasons. Unemployed persons consist of: • All persons who did not have a job at all during the survey week, made specific active efforts to find a job during the prior 4-week period, and were available for work (unless temporarily ill). • All persons who were not working and were waiting to be called back to a job from which they had been temporarily laid off. People who are neither Employed nor Unemployed are out of the labor force. • Persons under 16 years of age are automatically excluded from the official labor force measurements. • Residents of institutions and persons on active duty in the Armed Forces are excluded. • Persons who have no job AND are not looking for one are excluded. Many who do not participate in the labor force are going to school, retired or have family responsibilities. The Major Types of Unemployment Unemployment is characterized into five basic types: frictional, cyclical, seasonal, structural and technological. Frictional Unemployment - The continuous flow of individuals from job to job and in and out of employment. There will always be some frictional unemployment as resources are directed in the market. Cyclical Unemployment - Occurs during a major downturn in business cycle caused by a low demand for goods/services. (An example is September 11th) Seasonal Unemployment - Comes and goes with seasons of the year in which the demand for particular jobs rises and falls. (An example is construction or agriculture) Structural Unemployment - Results from fundamental changes in the structure of the economy. Occurs when demand for a product falls drastically so that workers specializing in the production of that product find themselves out of work. Technological Unemployment - Caused by technological changes reducing labor demands for specific tasks.
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