unemployment rate in the United States
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Unemployment, according to the
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
(Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or
self-employment Self-employment is the state of working for oneself rather than an employer. Tax authorities will generally view a person as self-employed if the person chooses to be recognised as such or if the person is generating income for which a tax return n ...
but currently available for
work Work may refer to: * Work (human activity), intentional activity people perform to support themselves, others, or the community ** Manual labour, physical work done by humans ** House work, housework, or homemaking ** Working animal, an animal t ...
during the reference period. Unemployment is measured by the unemployment rate, which is the number of people who are unemployed as a percentage of the
labour force The workforce or labour force is a concept referring to the pool of human beings either in employment or in unemployment. It is generally used to describe those working for a single company or industry, but can also apply to a geographic reg ...
(the total number of people employed added to those unemployed). Unemployment can have many sources, such as the following: * new
technologies Technology is the application of knowledge to reach practical goals in a specifiable and reproducible way. The word ''technology'' may also mean the product of such an endeavor. The use of technology is widely prevalent in medicine, science, ...
and inventions * the status of the
economy An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the ...
, which can be influenced by a
recession In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various ...
*
competition Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). Competition can arise between entities such as organisms, indiv ...
caused by
globalization Globalization, or globalisation (English in the Commonwealth of Nations, Commonwealth English; American and British English spelling differences#-ise, -ize (-isation, -ization), see spelling differences), is the process of foreign relation ...
and
international trade International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy) In most countries, such trade represents a significant ...
* policies of the
government A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is ...
*
regulation Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. Fo ...
and
market Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an ...
Unemployment and the status of the economy can be influenced by a country through, for example,
fiscal policy In economics and political science, fiscal policy is the use of government revenue collection (taxes or tax cuts) and expenditure to influence a country's economy. The use of government revenue expenditures to influence macroeconomic variab ...
. Furthermore, the
monetary authority In finance and economics, a monetary authority is the entity that manages a country’s currency and money supply, often with the objective of controlling inflation, interest rates, real GDP or unemployment rate. With its monetary tools, a m ...
of a country, such as the
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central b ...
, can influence the availability and cost for money through its
monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often a ...
. In addition to theories of unemployment, a few categorisations of unemployment are used for more precisely modelling the effects of unemployment within the economic system. Some of the main types of unemployment include structural unemployment, frictional unemployment,
cyclical unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work during the refere ...
, involuntary unemployment and classical unemployment. Structural unemployment focuses on foundational problems in the economy and inefficiencies inherent in labor markets, including a mismatch between the supply and demand of laborers with necessary skill sets. Structural arguments emphasize causes and solutions related to
disruptive technologies In business theory, disruptive innovation is innovation that creates a new market and value network or enters at the bottom of an existing market and eventually displaces established market-leading firms, products, and alliances. The concept wa ...
and
globalization Globalization, or globalisation (English in the Commonwealth of Nations, Commonwealth English; American and British English spelling differences#-ise, -ize (-isation, -ization), see spelling differences), is the process of foreign relation ...
. Discussions of frictional unemployment focus on voluntary decisions to work based on individuals' valuation of their own work and how that compares to current wage rates added to the time and effort required to find a job. Causes and solutions for frictional unemployment often address job entry threshold and wage rates. According to the UN's
International Labour Organization The International Labour Organization (ILO) is a United Nations agency whose mandate is to advance social and economic justice by setting international labour standards. Founded in October 1919 under the League of Nations, it is the first and o ...
(ILO), there were 172 million people worldwide (or 5% of the reported global workforce) without work in 2018. Because of the difficulty in measuring the unemployment rate by, for example, using surveys (as in the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
) or through registered unemployed citizens (as in some
Europe Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a subcontinent of Eurasia and it is located entirel ...
an countries), statistical figures such as the
employment-to-population ratio The Organisation for Economic Co-operation and Development defines the employment rate as the employment-to-population ratio. This is a statistical ratio that measures the proportion of a country's working age population (statistics are often gi ...
might be more suitable for evaluating the status of the
workforce The workforce or labour force is a concept referring to the pool of human beings either in employment or in unemployment. It is generally used to describe those working for a single company or industry, but can also apply to a geographic reg ...
and the economy if they were based on people who are registered, for example, as
taxpayer A taxpayer is a person or organization (such as a company) subject to pay a tax. Modern taxpayers may have an identification number, a reference number issued by a government to citizens or firms. The term "taxpayer" generally characterizes o ...
s.


Definitions, types, and theories

The state of being without any work yet looking for work is called unemployment. Economists distinguish between various overlapping types of and theories of unemployment, including cyclical or Keynesian unemployment, frictional unemployment, structural unemployment and classical unemployment. Some additional types of unemployment that are occasionally mentioned are seasonal unemployment, hardcore unemployment, and hidden unemployment. Though there have been several definitions of "voluntary" and " involuntary unemployment" in the economics literature, a simple distinction is often applied. Voluntary unemployment is attributed to the individual's decisions, but involuntary unemployment exists because of the socio-economic environment (including the market structure, government intervention, and the level of aggregate demand) in which individuals operate. In these terms, much or most of frictional unemployment is voluntary since it reflects individual search behavior. Voluntary unemployment includes workers who reject low-wage jobs, but involuntary unemployment includes workers fired because of an economic crisis, industrial decline, company bankruptcy, or organizational restructuring. On the other hand, cyclical unemployment, structural unemployment, and classical unemployment are largely involuntary in nature. However, the existence of structural unemployment may reflect choices made by the unemployed in the past, and classical (natural) unemployment may result from the legislative and economic choices made by labour unions or political parties. The clearest cases of involuntary unemployment are those with fewer job vacancies than unemployed workers even when wages are allowed to adjust and so even if all vacancies were to be filled, some unemployed workers would still remain. That happens with cyclical unemployment, as macroeconomic forces cause microeconomic unemployment, which can boomerang back and exacerbate those macroeconomic forces.


Real wage unemployment

Classical, natural, or real-wage unemployment, occurs when real wages for a job are set above the market-clearing level, causing the number of job-seekers to exceed the number of vacancies. On the other hand, most economists argue that as wages fall below a livable wage, many choose to drop out of the labour market and no longer seek employment. That is especially true in countries in which low-income families are supported through public welfare systems. In such cases, wages would have to be high enough to motivate people to choose employment over what they receive through public welfare. Wages below a livable wage are likely to result in lower labor market participation in the above-stated scenario. In addition, consumption of goods and services is the primary driver of increased demand for labor. Higher wages lead to workers having more income available to consume goods and services. Therefore, higher wages increase general consumption and as a result demand for labor increases and unemployment decreases. Many economists have argued that unemployment increases with increased governmental regulation. For example, minimum wage laws raise the cost of some low-skill laborers above market equilibrium, resulting in increased unemployment as people who wish to work at the going rate cannot (as the new and higher enforced wage is now greater than the value of their labour). Laws restricting layoffs may make businesses less likely to hire in the first place, as hiring becomes more risky. However, that argument overly simplifies the relationship between wage rates and unemployment by ignoring numerous factors that contribute to unemployment. Some, such as
Murray Rothbard Murray Newton Rothbard (; March 2, 1926 – January 7, 1995) was an American economist of the Austrian School, economic historian, political theorist, and activist. Rothbard was a central figure in the 20th-century American libertarian ...
, suggest that even social taboos can prevent wages from falling to the market-clearing level. In ''Out of Work: Unemployment and Government in the Twentieth-Century America'', economists Richard Vedder and Lowell Gallaway argue that the empirical record of wages rates, productivity, and unemployment in America validates classical unemployment theory. Their data shows a strong correlation between adjusted real wage and unemployment in the United States from 1900 to 1990. However, they maintain that their data does not take into account exogenous events.


Cyclical unemployment

Cyclical, deficient-demand, or
Keynesian Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output an ...
unemployment occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work. Demand for most goods and services falls, less production is needed and consequently, fewer workers are needed, wages are sticky and do not fall to meet the equilibrium level, and unemployment results. Its name is derived from the frequent ups and downs in the
business cycle Business cycles are intervals of expansion followed by recession in economic activity. These changes have implications for the welfare of the broad population as well as for private institutions. Typically business cycles are measured by examin ...
, but unemployment can also be persistent, such as during the Great Depression. With cyclical unemployment, the number of unemployed workers exceeds the number of job vacancies and so even if all open jobs were filled, some workers would still remain unemployed. Some associate cyclical unemployment with frictional unemployment because the factors that cause the friction are partially caused by cyclical variables. For example, a surprise decrease in the money supply may suddenly inhibit aggregate demand and thus inhibit
labor demand In economics, the labor demand of an employer is the number of labor-hours that the employer is willing to hire based on the various exogenous (externally determined) variables it is faced with, such as the wage rate, the unit cost of capital, the ...
.
Keynesian Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output an ...
economists, on the other hand, see the lack of supply of jobs as potentially resolvable by government intervention. One suggested intervention involves
deficit spending Within the budgetary process, deficit spending is the amount by which spending exceeds revenue over a particular period of time, also called simply deficit, or budget deficit; the opposite of budget surplus. The term may be applied to the budget ...
to boost employment and goods demand. Another intervention involves an expansionary
monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often a ...
to increase the supply of money, which should reduce
interest rate An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, ...
s, which, in turn, should lead to an increase in non-governmental spending.


Unemployment under "full employment"

In demands based theory, it is possible to abolish cyclical unemployment by increasing the aggregate demand for products and workers. However, the economy eventually hits an "
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduct ...
barrier" that is imposed by the four other kinds of unemployment to the extent that they exist. Historical experience suggests that low unemployment affects inflation in the short term but not the long term.Chang, R. (1997
"Is Low Unemployment Inflationary?"
''Federal Reserve Bank of Atlanta Economic Review'' 1Q97:4–13
In the long term, the
velocity of money image:M3 Velocity in the US.png, 300px, Similar chart showing the logged velocity (green) of a broader measure of money M3 that covers M2 plus large institutional deposits. The US no longer publishes official M3 measures, so the chart only runs thr ...
supply measures such as the MZM ("money zero maturity", representing cash and equivalent
demand deposit Demand deposits or checkbook money are funds held in demand accounts in commercial banks. These account balances are usually considered money and form the greater part of the narrowly defined money supply of a country. Simply put, these are depo ...
s) velocity is far more predictive of inflation than low unemployment.Oliver Hossfeld (2010
"US Money Demand, Monetary Overhang, and Inflation Prediction"
''International Network for Economic Research'' working paper no. 2010.4
Some demand theory economists see the inflation barrier as corresponding to the
natural rate of unemployment The natural rate of unemployment is the name that was given to a key concept in the study of economic activity. Milton Friedman and Edmund Phelps, tackling this 'human' problem in the 1960s, both received the Nobel Memorial Prize in Economic Scien ...
. The "natural" rate of unemployment is defined as the rate of unemployment that exists when the labour market is in equilibrium, and there is pressure for neither rising inflation rates nor falling inflation rates. An alternative technical term for that rate is the
NAIRU Non-accelerating inflation rate of unemployment (NAIRU) is a theoretical level of unemployment below which inflation would be expected to rise.
, the ''Non-Accelerating Inflation Rate of Unemployment''. Whatever its name, demand theory holds that if the unemployment rate gets "too low," inflation will accelerate in the absence of wage and price controls (incomes policies). One of the major problems with the NAIRU theory is that no one knows exactly what the NAIRU is, and it clearly changes over time. The margin of error can be quite high relative to the actual unemployment rate, making it hard to use the NAIRU in policy-making. Another, normative, definition of full employment might be called the ''ideal'' unemployment rate. It would exclude all types of unemployment that represent forms of inefficiency. This type of "full employment" unemployment would correspond to only frictional unemployment (excluding that part encouraging the
McJob "McJob" is a slang term for a low-paying, low-prestige dead-end job that requires few skills and offers very little chance of advancement. The term "McJob" comes from the name of the fast-food restaurant McDonald's, but is used to describe any lo ...
s management strategy) and so would be very low. However, it would be impossible to attain this full-employment target using only demand-side
Keynesian Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output an ...
stimulus without getting below the NAIRU and causing accelerating inflation (absent incomes policies). Training programs aimed at fighting structural unemployment would help here. To the extent that hidden unemployment exists, it implies that official unemployment statistics provide a poor guide to what unemployment rate coincides with "full employment."


Structural unemployment

Structural unemployment occurs when a labour market is unable to provide jobs for everyone who wants one because there is a mismatch between the skills of the unemployed workers and the skills needed for the available jobs. Structural unemployment is hard to separate empirically from frictional unemployment except that it lasts longer. As with frictional unemployment, simple demand-side stimulus will not work to abolish this type of unemployment easily. Structural unemployment may also be encouraged to rise by persistent cyclical unemployment: if an economy suffers from longlasting low aggregate demand, it means that many of the unemployed become disheartened, and their skills (including job-searching skills) become "rusty" and obsolete. Problems with debt may lead to homelessness and a fall into the vicious circle of poverty. That means that they may not fit the job vacancies that are created when the economy recovers. The implication is that sustained ''high'' demand may ''lower'' structural unemployment. This theory of persistence in structural unemployment has been referred to as an example of
path dependence Path dependence is a concept in economics and the social sciences, referring to processes where past events or decisions constrain later events or decisions. It can be used to refer to outcomes at a single point in time or to long-run equilibria ...
or " hysteresis." Much ''
technological unemployment Technological unemployment is the loss of jobs caused by technological change. It is a key type of structural unemployment. Technological change typically includes the introduction of labour-saving "mechanical-muscle" machines or more efficie ...
'', caused by the replacement of workers by machines might be counted as structural unemployment. Alternatively, technological unemployment might refer to the way in which steady increases in labour productivity mean that fewer workers are needed to produce the same level of output every year. The fact that aggregate demand can be raised to deal with the problem suggests that the problem is instead one of cyclical unemployment. As indicated by
Okun's law In economics, Okun's law is an empirically observed relationship between unemployment and losses in a country's production. It is named after Arthur Melvin Okun, who first proposed the relationship in 1962. The "gap version" states that for ever ...
, the demand side must grow sufficiently quickly to absorb not only the growing labour force but also the workers who are made redundant by the increased labour productivity. Seasonal unemployment may be seen as a kind of structural unemployment since it is linked to certain kinds of jobs (construction and migratory farm work). The most-cited official unemployment measures erase this kind of unemployment from the statistics using "seasonal adjustment" techniques. That results in substantial and permanent structural unemployment.


Frictional unemployment

Frictional unemployment is the time period between jobs in which a worker searches for or transitions from one job to another. It is sometimes called ''search unemployment'' and can be voluntary, based on the circumstances of the unemployed individual. Frictional unemployment exists because both jobs and workers are heterogeneous, and a mismatch can result between the characteristics of supply and demand. Such a mismatch can be related to skills, payment, work-time, location, seasonal industries, attitude, taste, and a multitude of other factors. New entrants (such as graduating students) and re-entrants (such as former homemakers) can also suffer a spell of frictional unemployment. Workers and employers accept a certain level of imperfection, risk or compromise, but usually not right away. They will invest some time and effort to find a better match. That is, in fact, beneficial to the economy since it results in a better allocation of resources. However, if the search takes too long and mismatches are too frequent, the economy suffers since some work will not get done. Therefore, governments will seek ways to reduce unnecessary frictional unemployment by multiple means including providing education, advice, training, and assistance such as
daycare center Child care, otherwise known as day care, is the care and supervision of a child or multiple children at a time, whose ages range from two weeks of age to 18 years. Although most parents spend a significant amount of time caring for their child(r ...
s. The frictions in the labour market are sometimes illustrated graphically with a
Beveridge curve A Beveridge curve, or UV curve, is a graphical representation of the relationship between unemployment and the job vacancy rate, the number of unfilled jobs expressed as a proportion of the labour force. It typically has vacancies on the vertical ...
, a downward-sloping, convex curve that shows a correlation between the unemployment rate on one axis and the vacancy rate on the other. Changes in the supply of or demand for labour cause movements along the curve. An increase or decrease in labour market frictions will shift the curve outwards or inwards.


Hidden unemployment

Official statistics often underestimate unemployment rates because of hidden, or covered, unemployment. That is the unemployment of potential workers that are not reflected in official unemployment statistics because of how the statistics are collected. In many countries, only those who have no work but are actively looking for work and/or qualifying for social security benefits are counted as unemployed. Those who have given up looking for work and sometimes those who are on government "retraining" programs are not officially counted among the unemployed even though they are not employed. The statistic also does not count the " underemployed", those working fewer hours than they would prefer or in a job that fails to make good use of their capabilities. In addition, those who are of working age but are currently in full-time education are usually not considered unemployed in government statistics. Traditional unemployed native societies who survive by gathering, hunting, herding, and farming in wilderness areas may or may not be counted in unemployment statistics.


Long-term unemployment

Long-term unemployment (LTU) is defined in
European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...
statistics as unemployment lasting for longer than one year (while unemployment lasting over two years is defined as ''very long-term unemployment''). The United States Bureau of Labor Statistics (BLS), which reports current long-term unemployment rate at 1.9 percent, defines this as unemployment lasting 27 weeks or longer. Long-term unemployment is a component of structural unemployment, which results in long-term unemployment existing in every social group, industry, occupation, and all levels of education. In 2015 the European Commission published recommendations on how to reduce long-term unemployment. These advised governments to: * encourage long-term unemployed people to register with an employment service; * provide each registered long-term unemployed person with an individual in-depth assessment to identify their needs and potential within 18 months; * offer a tailor-made job integration agreement (JIA) to all registered long-term unemployed within 18 months. These might include measures such as
mentoring Mentorship is the influence, guidance, or direction given by a mentor. A mentor is someone who teaches or gives help and advice to a less experienced and often younger person. In an organizational setting, a mentor influences the personal and p ...
, help with job search, further education and
training Training is teaching, or developing in oneself or others, any skills and knowledge or fitness that relate to specific useful competencies. Training has specific goals of improving one's capability, capacity, productivity and performance. I ...
, support for housing, transport, child and care services and rehabilitation. Each person would have a single point of contact to access this support, which would be implemented in partnership with employers. In 2017–2019 it implemented the Long-Term Unemployment project to research solutions implemented by EU member states and produce a toolkit to guide government action. Progress was evaluated in 2019.


Marxian theory of unemployment

Marxists share the Keynesian viewpoint of the relationship between economic demand and employment, but with the caveat that the market system's propensity to slash wages and reduce labor participation on an enterprise level causes a requisite decrease in aggregate demand in the economy as a whole, causing crises of unemployment and periods of low economic activity before the capital accumulation (investment) phase of economic growth can continue. According to
Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...
, unemployment is inherent within the unstable capitalist system and periodic crises of mass unemployment are to be expected. He theorized that unemployment was inevitable and even a necessary part of the capitalist system, with recovery and regrowth also part of the process. The function of the proletariat within the capitalist system is to provide a "
reserve army of labour Reserve army of labour is a concept in Karl Marx's critique of political economy Political economy is the study of how economic systems (e.g. markets and national economies) and political systems (e.g. law, institutions, government) are l ...
" that creates downward pressure on wages. This is accomplished by dividing the proletariat into surplus labour (employees) and under-employment (unemployed). This reserve army of labour fight among themselves for scarce jobs at lower and lower wages. At first glance, unemployment seems inefficient since unemployed workers do not increase profits, but unemployment is profitable within the global capitalist system because unemployment lowers wages which are costs from the perspective of the owners. From this perspective low wages benefit the system by reducing
economic rent In economics, economic rent is any payment (in the context of a market transaction) to the owner of a factor of production in excess of the cost needed to bring that factor into production. In classical economics, economic rent is any payment m ...
s. Yet, it does not benefit workers; according to Karl Marx, the workers (proletariat) work to benefit the bourgeoisie through their production of capital. Capitalist systems unfairly manipulate the market for labour by perpetuating unemployment which lowers laborers' demands for fair wages. Workers are pitted against one another at the service of increasing profits for owners. As a result of the capitalist mode of production, Marx argued that workers experienced alienation and estrangement through their economic identity. According to Marx, the only way to permanently eliminate unemployment would be to abolish capitalism and the system of forced competition for wages and then shift to a socialist or communist economic system. For contemporary Marxists, the existence of persistent unemployment is proof of the inability of capitalism to ensure full employment.


Measurement

There are also different ways national statistical agencies measure unemployment. The differences may limit the validity of international comparisons of unemployment data. To some degree, the differences remain despite national statistical agencies increasingly adopting the definition of unemployment of the International Labour Organization.International Labour Organization Bureau of Statistic
Measurement of employment, unemployment and underemployment – Current international standards and issues in their application
Retrieved August 2010
To facilitate international comparisons, some organizations, such as the
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
, Eurostat, and International Labor Comparisons Program, adjust data on unemployment for comparability across countries. Though many people care about the number of unemployed individuals, economists typically focus on the unemployment rate, which corrects for the normal increase in the number of people employed caused by increases in population and increases in the labour force relative to the population. The unemployment rate is expressed as a percentage and calculated as follows: :\text=\frac \times 100 As defined by the
International Labour Organization The International Labour Organization (ILO) is a United Nations agency whose mandate is to advance social and economic justice by setting international labour standards. Founded in October 1919 under the League of Nations, it is the first and o ...
, "unemployed workers" are those who are currently not working but are willing and able to work for pay, currently available to work, and have actively searched for work. Individuals who are actively seeking job placement must make the effort to be in contact with an employer, have job interviews, contact job placement agencies, send out resumes, submit applications, respond to advertisements, or some other means of active job searching within the prior four weeks. Simply looking at advertisements and not responding will not count as actively seeking job placement. Since not all unemployment may be "open" and counted by government agencies, official statistics on unemployment may not be accurate. In the United States, for example, the unemployment rate does not take into consideration those individuals who are not actively looking for employment, such as those who are still attending college. According to the OECD, Eurostat, and the US Bureau of Labor Statistics the unemployment rate is the number of unemployed people as a percentage of the labour force. "An unemployed person is defined by Eurostat, according to the guidelines of the International Labour Organization, as: * someone aged 15 to 74 (in Italy, Spain, the United Kingdom, Iceland, Norway: 16 to 74 years); * without work during the reference week; * available to start work within the next two weeks (or has already found a job to start within the next three months); * actively having sought employment at some time during the last four weeks." The labour force, or workforce, includes both employed (employees and self-employed) and unemployed people but not the economically inactive, such as pre-school children, school children, students and pensioners. The unemployment rate of an individual country is usually calculated and reported on a monthly, quarterly, and yearly basis by the National Agency of Statistics. Organisations like the OECD report statistics for all of its member states. Certain countries provide unemployment compensation for a certain period of time for unemployed citizens who are registered as unemployed at the government
employment agency An employment agency is an organization which matches employers to employees. In developed countries, there are multiple private businesses which act as employment agencies and a publicly-funded employment agency. Public employment agencies One ...
. Furthermore, pension receivables or claims could depend on the registration at the government employment agency. In many countries like in
Germany Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...
, the unemployment rate is based on the number of people who are registered as unemployed. Other countries like the United States use a labour force survey to calculate the unemployment rate. The ILO describes four different methods to calculate the unemployment rate: * ''Labour Force Sample Surveys'' are the most preferred method of unemployment rate calculation since they give the most comprehensive results and enables calculation of unemployment by different group categories such as race and gender. This method is the most internationally comparable. * ''Official Estimates'' are determined by a combination of information from one or more of the other three methods. The use of this method has been declining in favor of labour surveys. * ''Social Insurance Statistics'', such as unemployment benefits, are computed base on the number of persons insured representing the total labour force and the number of persons who are insured that are collecting benefits. This method has been heavily criticized because if the expiration of benefits before the person finds work. * ''Employment Office Statistics'' are the least effective since they include only a monthly tally of unemployed persons who enter employment offices. This method also includes those who are not unemployed by the ILO definition. The primary measure of unemployment, U3, allows for comparisons between countries. Unemployment differs from country to country and across different time periods. For example, in the 1990s and 2000s, the United States had lower unemployment levels than many countries in the
European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...
, which had significant internal variation, with countries like the United Kingdom and
Denmark ) , song = ( en, "King Christian stood by the lofty mast") , song_type = National and royal anthem , image_map = EU-Denmark.svg , map_caption = , subdivision_type = Sovereign state , subdivision_name = Kingdom of Denmark , establish ...
outperforming
Italy Italy ( it, Italia ), officially the Italian Republic, ) or the Republic of Italy, is a country in Southern Europe. It is located in the middle of the Mediterranean Sea, and its territory largely coincides with the homonymous geographical ...
and
France France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of overseas regions and territories in the Americas and the Atlantic, Pacific and Indian Oceans. Its metropolitan area ...
. However, large economic events like the Great Depression can lead to similar unemployment rates across the globe. In 2013, the ILO adopted a resolution to introduce new indicators to measure the unemployment rate. *LU1: Unemployment rate: ersons in unemployment / labour force× 100 *LU2: Combined rate of time-related underemployment and unemployment: persons in time-related underemployment + persons in unemployment) / labour forcex 100 *LU3: Combined rate of unemployment and potential labour force: persons in unemployment + potential labour force) / (extended labour force)× 100 *LU4: Composite measure of labour underutilization: persons in time-related underemployment + persons in unemployment + potential labour force) / (extended labour force)× 100


European Union (Eurostat)

Eurostat, the statistical office of the
European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...
, defines unemployed as those persons between age 15 and 74 who are not working, have looked for work in the last four weeks, and are ready to start work within two weeks; this definition conforms to ILO standards. Both the actual count and the unemployment rate are reported. Statistical data are available by member state for the European Union as a whole (EU28) as well as for the
eurozone The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro ( €) as their primary currency and sole legal tender, and have thus fully implemented EMU polici ...
(EA19). Eurostat also includes a long-term unemployment rate, which is defined as part of the unemployed who have been unemployed for more than one year. The main source used is the European Union Labour Force Survey (EU-LFS). It collects data on all member states each quarter. For monthly calculations, national surveys or national registers from employment offices are used in conjunction with quarterly EU-LFS data. The exact calculation for individual countries, resulting in harmonized monthly data, depends on the availability of the data.


United States Bureau of Labor statistics

The Bureau of Labor Statistics measures employment and unemployment (of those over 17 years of age) by using two different labor force surveys conducted by the
United States Census Bureau The United States Census Bureau (USCB), officially the Bureau of the Census, is a principal agency of the U.S. Federal Statistical System, responsible for producing data about the American people and economy. The Census Bureau is part of t ...
(within the
United States Department of Commerce The United States Department of Commerce is an executive department of the U.S. federal government concerned with creating the conditions for economic growth and opportunity. Among its tasks are gathering economic and demographic data for bus ...
) and/or the Bureau of Labor Statistics (within the
United States Department of Labor The United States Department of Labor (DOL) is one of the executive departments of the U.S. federal government. It is responsible for the administration of federal laws governing occupational safety and health, wage and hour standards, unemploy ...
) that gather employment statistics monthly. The
Current Population Survey The Current Population Survey (CPS) is a monthly survey of about 60,000 U.S. households conducted by the United States Census Bureau for the Bureau of Labor Statistics (BLS). The BLS uses the data to publish reports early each month called the Em ...
(CPS), or "Household Survey," conducts a survey based on a sample of 60,000 households. The survey measures the unemployment rate based on the ILO definition. The Current Employment Statistics survey (CES), or "Payroll Survey," conducts a survey based on a sample of 160,000 businesses and government agencies, which represent 400,000 individual employers.U.S. Department of Labor, Bureau of Labor Statistics,
The Employment Situation: January 2008
" January 2008
Since the survey measures only civilian nonagricultural employment, it does not calculate an unemployment rate, and it differs from the ILO unemployment rate definition. Both sources have different classification criteria and usually produce differing results. Additional data are also available from the government, such as the unemployment insurance weekly claims report available from the Office of Workforce Security, within the U.S. Department of Labor's
Employment and Training Administration The Employment and Training Administration (ETA) is part of the U.S. Department of Labor. Its mission is to provide training, employment, labor market information, and income maintenance services. ETA administers federal government job training and ...
. The Bureau of Labor Statistics provides up-to-date numbers via a PDF linked here. The BLS also provides a readable concise current Employment Situation Summary, updated monthly. The Bureau of Labor Statistics also calculates six alternate measures of unemployment, U1 to U6, which measure different aspects of unemployment: * U1: Percentage of labor force unemployed 15 weeks or longer. * U2: Percentage of labor force who lost jobs or completed temporary work. * U3: Official unemployment rate, per the ILO definition, occurs when people are without jobs and they have actively looked for
work Work may refer to: * Work (human activity), intentional activity people perform to support themselves, others, or the community ** Manual labour, physical work done by humans ** House work, housework, or homemaking ** Working animal, an animal t ...
within the past four weeks. * U4: U3 + " discouraged workers", or those who have stopped looking for work because current economic conditions make them believe that no work is available for them. * U5: U4 + other "marginally attached workers," or "loosely attached workers," or those who "would like" and are able to work but have not looked for work recently. * U6: U5 + Part-time workers who want to work full-time, but cannot for economic reasons (
underemployment Underemployment is the underuse of a worker because a job does not use the worker's skills, is part-time, or leaves the worker idle. Examples include holding a part-time job despite desiring full-time work, and overqualification, in which the ...
). ''Note: "Marginally attached workers" are added to the total labour force for unemployment rate calculation for U4, U5, and U6.'' The BLS revised the CPS in 1994 and among the changes the measure representing the official unemployment rate was renamed U3 instead of U5. In 2013, Representative Hunter proposed that the Bureau of Labor Statistics use the U5 rate instead of the current U3 rate. Statistics for the US economy as a whole hide variations among groups. For example, in January 2008, the US unemployment rates were 4.4% for adult men, 4.2% for adult women, 4.4% for Caucasians, 6.3% for Hispanics or Latinos (all races), 9.2% for African Americans, 3.2% for Asian Americans, and 18.0% for teenagers. Also, the US unemployment rate would be at least 2% higher if prisoners and jail inmates were counted. The unemployment rate is included in a number of major economic indices including the US Conference Board's
Index of Leading Indicators The Conference Board Leading Economic Index is an American economic leading indicator intended to forecast future economic activity. It is calculated by The Conference Board, a non-governmental organization, which determines the value of the index ...
a
macroeconomic Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and ...
measure of the state of the economy.


Alternatives


Limitations of definition

Some critics believe that current methods of measuring unemployment are inaccurate in terms of the impact of unemployment on people as these methods do not take into account the 1.5% of the available working population incarcerated in US prisons (who may or may not be working while they are incarcerated); those who have lost their jobs and have become discouraged over time from actively looking for work; those who are
self-employed Self-employment is the state of working for oneself rather than an employer. Tax authorities will generally view a person as self-employed if the person chooses to be recognised as such or if the person is generating income for which a tax return n ...
or wish to become self-employed, such as tradesmen or building contractors or information technology consultants; those who have retired before the official retirement age but would still like to work (involuntary early retirees); those on
disability Disability is the experience of any condition that makes it more difficult for a person to do certain activities or have equitable access within a given society. Disabilities may be cognitive, developmental, intellectual, mental, physical, ...
pensions who do not possess full health but still wish to work in occupations that suitable for their medical conditions; or those who work for payment for as little as one hour per week but would like to work full time. The last people are "involuntary part-time" workers, those who are underemployed, such as a computer programmer who is working in a retail store until he can find a permanent job, involuntary stay-at-home mothers who would prefer to work, and graduate and professional school students who are unable to find worthwhile jobs after they graduated with their bachelor's degrees. Internationally, some nations' unemployment rates are sometimes muted or appear less severe because of the number of self-employed individuals working in agriculture. Small independent farmers are often considered self-employed and so cannot be unemployed. That can impact non-industrialized economies, such as the United States and Europe in the early 19th century, since overall unemployment was approximately 3% because so many individuals were self-employed, independent farmers; however, non-agricultural unemployment was as high as 80%. Many economies industrialize and so experience increasing numbers of non-agricultural workers. For example, the United States' non-agricultural labour force increased from 20% in 1800 to 50% in 1850 and 97% in 2000. The shift away from self-employment increases the percentage of the population that is included in unemployment rates. When unemployment rates between countries or time periods are compared, it is best to consider differences in their levels of industrialization and self-employment. Additionally, the measures of employment and unemployment may be "too high." In some countries, the availability of
unemployment benefits Unemployment benefits, also called unemployment insurance, unemployment payment, unemployment compensation, or simply unemployment, are payments made by authorized bodies to unemployed people. In the United States, benefits are funded by a comp ...
can inflate statistics by giving an incentive to register as unemployed. People who do not seek work may choose to declare themselves unemployed to get benefits; people with undeclared paid occupations may try to get unemployment benefits in addition to the money that they earn from their work. However, in the United States, Canada, Mexico, Australia, Japan, and the European Union, unemployment is measured using a sample survey (akin to a Gallup poll). According to the BLS, a number of Eastern European nations have instituted labour force surveys as well. The sample survey has its own problems because the total number of workers in the economy is calculated based on a sample, rather than a census. It is possible to be neither employed nor unemployed by ILO definitions by being outside of the "labour force." Such people have no job and are not looking for one. Many of them go to school or are retired. Family responsibilities keep others out of the labour force. Still others have a physical or mental disability that prevents them from participating in the labour force. Some people simply elect not to work and prefer to be dependent on others for sustenance. Typically, employment and the labour force include only work that is done for monetary gain. Hence, a
homemaker Homemaking is mainly an American and Canadian term for the management of a home, otherwise known as housework, housekeeping, housewifery or household management. It is the act of overseeing the organizational, day-to-day operations of a hous ...
is neither part of the labour force nor unemployed. Also, full-time students and prisoners are considered to be neither part of the labour force nor unemployed. The number of prisoners can be important. In 1999, economists Lawrence F. Katz and Alan B. Krueger estimated that increased incarceration lowered measured unemployment in the United States by 0.17% between 1985 and the late 1990s. In particular, as of 2005, roughly 0.7% of the US population is incarcerated (1.5% of the available working population). Additionally, children, the elderly, and some individuals with disabilities are typically not counted as part of the labour force and so are not included in the unemployment statistics. However, some elderly and many disabled individuals are active in the labour market. In the early stages of an
economic boom An economic expansion is an increase in the level of economic activity, and of the goods and services available. It is a period of economic growth as measured by a rise in real GDP. The explanation of fluctuations in aggregate economic activit ...
, unemployment often rises. That is because people join the labour market (give up studying, start a job hunt, etc.) as a result of the improving job market, but until they have actually found a position, they are counted as unemployed. Similarly, during a
recession In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various ...
, the increase in the unemployment rate is moderated by people leaving the labour force or being otherwise discounted from the labour force, such as with the self-employed. For the fourth quarter of 2004, according to
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...

Employment Outlook 2005
), normalized unemployment for men aged 25 to 54 was 4.6% in the US and 7.4% in France. At the same time and for the same population, the employment rate (number of workers divided by population) was 86.3% in the US and 86.7% in France. That example shows that the unemployment rate was 60% higher in France than in the US, but more people in that demographic were working in France than in the US, which is counterintuitive if it is expected that the unemployment rate reflects the health of the labour market. Those deficiencies make many labour market economists prefer to look at a range of economic statistics such as labour market participation rate, the percentage of people between 15 and 64 who are currently employed or searching for employment, the total number of full-time jobs in an economy, the number of people seeking work as a raw number and not a percentage, and the total number of person-hours worked in a month compared to the total number of person-hours people would like to work. In particular, the
National Bureau of Economic Research The National Bureau of Economic Research (NBER) is an American private nonprofit research organization "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic c ...
does not use the unemployment rate but prefers various employment rates to date recessions.


Labor force participation rate

The labor force participation rate is the ratio between the
labor force The workforce or labour force is a concept referring to the pool of human beings either in employment or in unemployment. It is generally used to describe those working for a single company or industry, but can also apply to a geographic reg ...
and the overall size of their
cohort Cohort or cohortes may refer to: * Cohort (educational group), a group of students working together through the same academic curriculum * Cohort (floating point), a set of different encodings of the same numerical value * Cohort (military unit ...
(national population of the same age range). In the West, during the later half of the 20th century, the labor force participation rate increased significantly because of an increase in the number of women entering the workplace. In the United States, there have been four significant stages of women's participation in the labour force: increases in the 20th century and decreases in the 21st century. Male labor force participation decreased from 1953 to 2013. Since October 2013, men have been increasingly joining the labour force. From the late 19th century to the 1920s, very few women worked outside the home. They were young single women who typically withdrew from the labor force at marriage unless family needed two incomes. Such women worked primarily in the
textile manufacturing Textile Manufacturing or Textile Engineering is a major industry. It is largely based on the conversion of fibre into yarn, then yarn into fabric. These are then dyed or printed, fabricated into cloth which is then converted into useful goods ...
industry or as domestic workers. That profession empowered women and allowed them to earn a living wage. At times, they were a financial help to their families. Between 1930 and 1950, female labor force participation increased primarily because of the increased demand for office workers, women's participation in the high school movement, and
electrification Electrification is the process of powering by electricity and, in many contexts, the introduction of such power by changing over from an earlier power source. The broad meaning of the term, such as in the history of technology, economic histor ...
, which reduced the time that was spent on household chores. From the 1950s to the early 1970s, most women were secondary earners working mainly as secretaries, teachers, nurses, and librarians (
pink-collar A pink-collar worker is someone working in the care-oriented career field or in fields historically considered to be women's work. This may include jobs in the beauty industry, nursing, social work, teaching, secretarial work, upholstery U ...
jobs). From the mid-1970s to the late 1990s, there was a period of revolution of women in the labor force brought on by various factors, many of which arose from the
second-wave feminism Second-wave feminism was a period of feminist activity that began in the early 1960s and lasted roughly two decades. It took place throughout the Western world, and aimed to increase equality for women by building on previous feminist gains. ...
movement. Women more accurately planned for their future in the work force by investing in more applicable majors in college that prepared them to enter and compete in the labor market. In the United States, the female labor force participation rate rose from approximately 33% in 1948 to a peak of 60.3% in 2000. As of April 2015, the female labor force participation is at 56.6%, the male labor force participation rate is at 69.4%, and the total is 62.8%.Civilian Labor Force Participation Rate: Women
Federal Reserve Bank of St. Louis
A common theory in modern economics claims that the rise of women participating in the US labor force in the 1950s to the 1990s was caused by the introduction of a new contraceptive technology, birth control pills, as well as the adjustment of
age of majority The age of majority is the threshold of legal adulthood as recognized or declared in law. It is the moment when minors cease to be considered such and assume legal control over their persons, actions, and decisions, thus terminating the contr ...
laws. The use of birth control gave women the flexibility of opting to invest and to advance their career while they maintained a relationship. By having control over the timing of their fertility, they were not running a risk of thwarting their career choices. However, only 40% of the population actually used the birth control pill. That implies that other factors may have contributed to women choosing to invest in advancing their careers. One factor may be that an increasing number of men delayed the age of marriage, which allowed women to marry later in life without them worrying about the quality of older men. Other factors include the changing nature of work, with machines replacing physical labor, thus eliminating many traditional male occupations, and the rise of the service sector in which many jobs are gender neutral. Another factor that may have contributed to the trend was the
Equal Pay Act of 1963 The Equal Pay Act of 1963 is a United States labor law amending the Fair Labor Standards Act, aimed at abolishing wage disparity based on sex (see gender pay gap). It was signed into law on June 10, 1963, by John F. Kennedy as part of his New Fro ...
, which aimed at abolishing wage disparity based on sex. Such legislation diminished sexual discrimination and encouraged more women to enter the labor market by receiving fair remuneration to help raising families and children. At the turn of the 21st century, the labor force participation began to reverse its long period of increase. Reasons for the change include a rising share of older workers, an increase in school enrollment rates among young workers, and a decrease in female labor force participation. The labor force participation rate can decrease when the rate of growth of the population outweighs that of the employed and the unemployed together. The labor force participation rate is a key component in long-term economic growth, almost as important as
productivity Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...
. A historic shift began around the end of the
Great Recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At ...
as women began leaving the labor force in the United States and other developed countries. The female labor force participation rate in the United States has steadily decreased since 2009, and as of April 2015, the female labor force participation rate has gone back down to 1988 levels of 56.6%. Participation rates are defined as follows: The labor force participation rate explains how an increase in the unemployment rate can occur simultaneously with an increase in employment. If a large number of new workers enter the labor force but only a small fraction become employed, then the increase in the number of unemployed workers can outpace the growth in employment.


Unemployment-to-population ratio

The unemployment-to-population ratio calculates the share of unemployed for the whole population. This is in contrast to the unemployment rate, which calculates the percentage of unemployed persons in relation to the ''active'' population. Particularly, many young people between 15 and 24 are studying full-time and so are neither working nor looking for a job. That means that they are not part of the labor force, which is used as the
denominator A fraction (from la, fractus, "broken") represents a part of a whole or, more generally, any number of equal parts. When spoken in everyday English, a fraction describes how many parts of a certain size there are, for example, one-half, eight ...
when the unemployment rate is calculated. The
youth unemployment Youth unemployment is the situation of young people who are looking for a job but cannot find a job, with the age range being defined by the United Nations as 15–24 years old. An unemployed person is defined as someone who does not have a job ...
ratios in the European Union range from 5.2 (Austria) to 20.6 percent (Spain). They are considerably lower than the standard youth unemployment rates, ranging from 7.9 (Germany) to 57.9 percent (Greece).


Effects

High and the persistent unemployment, in which
economic inequality There are wide varieties of economic inequality, most notably income inequality measured using the distribution of income (the amount of money people are paid) and wealth inequality measured using the distribution of wealth (the amount of ...
increases, has a negative effect on subsequent long-run economic growth. Unemployment can harm growth because it is a waste of resources; generates redistributive pressures and subsequent distortions; drives people to poverty; constrains liquidity limiting labor mobility; and erodes self-esteem promoting social dislocation, unrest, and conflict. The 2013 winner of the Nobel Prize in Economics,
Robert J. Shiller Robert James Shiller (born March 29, 1946) is an American economist, academic, and author. As of 2019, he serves as a Sterling Professor of Economics at Yale University and is a fellow at the Yale School of Management's International Center for ...
, said that rising inequality in the United States and elsewhere is the most important problem.


Costs


Individual

Unemployed individuals are unable to earn money to meet financial obligations. Failure to pay mortgage payments or to pay rent may lead to homelessness through foreclosure or
eviction Eviction is the removal of a tenant from rental property by the landlord. In some jurisdictions it may also involve the removal of persons from premises that were foreclosed by a mortgagee (often, the prior owners who defaulted on a mortgag ...
. Across the United States the growing ranks of people made homeless in the foreclosure crisis are generating
tent cities A tent city is a temporary housing facility made using tents or other temporary structures. State governments or military organizations set up tent cities to house evacuees, refugees, or soldiers. UNICEF's Supply Division supplies expandable te ...
. Unemployment increases susceptibility to cardiovascular disease,
somatization Somatization is a tendency to experience and communicate psychological distress in the form of bodily and organic symptoms and to seek medical help for them. More commonly expressed, it is the generation of physical symptoms of a psychiatric cond ...
, anxiety disorders, depression, and suicide. In addition, unemployed people have higher rates of medication use, poor diet, physician visits,
tobacco smoking Tobacco smoking is the practice of burning tobacco and ingesting the resulting smoke. The smoke may be inhaled, as is done with cigarettes, or simply released from the mouth, as is generally done with pipes and cigars. The practice is believed ...
, alcoholic beverage consumption, drug use, and lower rates of exercise. According to a study published in Social Indicator Research, even those who tend to be optimistic find it difficult to look on the bright side of things when unemployed. Using interviews and data from German participants aged 16 to 94, including individuals coping with the stresses of real life and not just a volunteering student population, the researchers determined that even optimists struggled with being unemployed. In 1979, M. Harvey Brenner found that for every 10% increase in the number of unemployed, there is an increase of 1.2% in total mortality, a 1.7% increase in cardiovascular disease, 1.3% more
cirrhosis Cirrhosis, also known as liver cirrhosis or hepatic cirrhosis, and end-stage liver disease, is the impaired liver function caused by the formation of scar tissue known as fibrosis due to damage caused by liver disease. Damage causes tissue rep ...
cases, 1.7% more suicides, 4.0% more arrests, and 0.8% more assaults reported to the police. A study by Christopher Ruhm in 2000 on the effect of recessions on health found that several measures of health actually improve during recessions. As for the impact of an economic downturn on crime, during the Great Depression, the crime rate did not decrease. The unemployed in the US often use
welfare Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specifical ...
programs such as food stamps or accumulating
debt Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...
because unemployment insurance in the US generally does not replace most of the income that was received on the job, and one cannot receive such aid indefinitely. Not everyone suffers equally from unemployment. In a prospective study of 9,570 individuals over four years, highly-conscientious people suffered more than twice as much if they became unemployed. The authors suggested that may because of conscientious people making different attributions about why they became unemployed or through experiencing stronger reactions following failure. There is also the possibility of reverse causality from poor health to unemployment. Some researchers hold that many of the low-income jobs are not really a better option than unemployment with a
welfare state A welfare state is a form of government in which the state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal opportunity, equita ...
, with its
unemployment insurance Unemployment benefits, also called unemployment insurance, unemployment payment, unemployment compensation, or simply unemployment, are payments made by authorized bodies to unemployed people. In the United States, benefits are funded by a comp ...
benefits. However, since it is difficult or impossible to get unemployment insurance benefits without having worked in the past, those jobs and unemployment are more complementary than they are substitutes. (They are often held short-term, either by students or by those trying to gain experience; turnover in most low-paying jobs is high.) Another cost for the unemployed is that the combination of unemployment, lack of financial resources, and social responsibilities may push unemployed workers to take jobs that do not fit their skills or allow them to use their talents. Unemployment can cause
underemployment Underemployment is the underuse of a worker because a job does not use the worker's skills, is part-time, or leaves the worker idle. Examples include holding a part-time job despite desiring full-time work, and overqualification, in which the ...
, and fear of job loss can spur psychological anxiety. As well as anxiety, it can cause depression, lack of confidence, and huge amounts of stress, which is increased when the unemployed are faced with health issues, poverty, and lack of relational support. Another personal cost of unemployment is its impact on relationships. A 2008 study from Covizzi, which examined the relationship between unemployment and divorce, found that the rate of divorce is greater for couples when one partner is unemployed. However, a more recent study has found that some couples often stick together in "unhappy" or "unhealthy" marriages when they are unemployed to buffer financial costs. A 2014 study by Van der Meer found that the stigma that comes from being unemployed affects personal well-being, especially for men, who often feel as though their masculine identities are threatened by unemployment. Unemployment can also bring personal costs in relation to gender. One study found that women are more likely to experience unemployment than men and that they are less likely to move from temporary positions to permanent positions. Another study on gender and unemployment found that men, however, are more likely to experience greater stress, depression, and adverse effects from unemployment, largely stemming from the perceived threat to their role as breadwinner. The study found that men expect themselves to be viewed as "less manly" after a job loss than they actually are and so they engage in compensating behaviors, such as financial risk-taking and increased assertiveness. Unemployment has been linked to extremely adverse effects on men's
mental health Mental health encompasses emotional, psychological, and social well-being, influencing cognition, perception, and behavior. It likewise determines how an individual handles stress, interpersonal relationships, and decision-making. Mental hea ...
. Professor Ian Hickie of the
University of Sydney The University of Sydney (USYD), also known as Sydney University, or informally Sydney Uni, is a public research university located in Sydney, Australia. Founded in 1850, it is the oldest university in Australia and is one of the country's ...
said that evidence showed that men have more restricted social networks than women and that men have are heavily work-based. Therefore, the loss of a job for men means the loss of a whole set of social connections as well. That loss can then lead to men becoming socially isolated very quickly. An Australian study on the mental health impacts of graduating during an economic downturn found that the negative mental health outcomes are greater and more scarring for men than women. The effect was particularly pronounced for those with vocational or secondary education. Costs of unemployment also vary depending on age. The young and the old are the two largest age groups currently experiencing unemployment. A 2007 study from Jacob and Kleinert found that young people (ages 18 to 24) who have fewer resources and limited work experiences are more likely to be unemployed. Other researchers have found that today's high school seniors place a lower value on work than those in the past, which is likely because they recognize the limited availability of jobs. At the other end of the age spectrum, studies have found that older individuals have more barriers than younger workers to employment, require stronger social networks to acquire work, and are also less likely to move from temporary to permanent positions. Additionally, some older people see
age discrimination Ageism, also spelled agism, is discrimination against individuals or groups on the basis of their age. The term was coined in 1969 by Robert Neil Butler to describe discrimination against seniors, and patterned on sexism and racism. Butler def ...
as the reason for them not getting hired.


Social

An economy with high unemployment is not using all of the resources, specifically labour, available to it. Since it is operating below its
production possibility frontier Production may refer to: Economics and business * Production (economics) * Production, the act of manufacturing goods * Production, in the outline of industrial organization, the act of making products (goods and services) * Production as a stati ...
, it could have higher output if all of the workforce were usefully employed. However, there is a tradeoff between economic efficiency and unemployment: if all frictionally unemployed accepted the first job that they were offered, they would be likely to be operating at below their skill level, reducing the economy's efficiency. During a long period of unemployment, workers can lose their skills, causing a loss of human capital. Being unemployed can also reduce the
life expectancy Life expectancy is a statistical measure of the average time an organism is expected to live, based on the year of its birth, current age, and other demographic factors like sex. The most commonly used measure is life expectancy at birth ...
of workers by about seven years. High unemployment can encourage
xenophobia Xenophobia () is the fear or dislike of anything which is perceived as being foreign or strange. It is an expression of perceived conflict between an in-group and out-group and may manifest in suspicion by the one of the other's activities, a ...
and
protectionism Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulatio ...
since workers fear that foreigners are stealing their jobs. Efforts to preserve existing jobs of domestic and native workers include legal barriers against "outsiders" who want jobs, obstacles to immigration, and/or
tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and pol ...
s and similar
trade barrier Trade barriers are government-induced restrictions on international trade. According to the theory of comparative advantage, trade barriers are detrimental to the world economy and decrease overall economic efficiency. Most trade barriers work o ...
s against foreign competitors. High unemployment can also cause social problems such as crime. If people have less disposable income than before, it is very likely that crime levels within the economy will increase. A 2015 study published in ''
The Lancet ''The Lancet'' is a weekly peer-reviewed general medical journal and one of the oldest of its kind. It is also the world's highest-impact academic journal. It was founded in England in 1823. The journal publishes original research articles, ...
'', estimates that unemployment causes 45,000 suicides a year globally.


Sociopolitical

High levels of unemployment can be causes of civil unrest, in some cases leading to revolution, particularly
totalitarianism Totalitarianism is a form of government and a political system that prohibits all opposition parties, outlaws individual and group opposition to the state and its claims, and exercises an extremely high if not complete degree of control and regu ...
. The fall of the
Weimar Republic The Weimar Republic (german: link=no, Weimarer Republik ), officially named the German Reich, was the government of Germany from 1918 to 1933, during which it was a constitutional federal republic for the first time in history; hence it is ...
in 1933 and Adolf Hitler's rise to power, which culminated in
World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposing ...
and the deaths of tens of millions and the destruction of much of the physical capital of Europe, is attributed to the poor economic conditions in Germany at the time, notably a high unemployment rateWhy are We Afraid to Create the Jobs We Need?
Les Leopold, 5 March 2010
of above 20%; see Great Depression in Central Europe for details. However the
hyperinflation in the Weimar Republic Hyperinflation affected the German Papiermark, the currency of the Weimar Republic, between 1921 and 1923, primarily in 1923. It caused considerable internal political instability in the country, the occupation of the Ruhr by France and Belgium, ...
is not directly blamed for the Nazi rise. Hyperinflation occurred primarily in 1921 to 1923, the year of Hitler's Beer Hall Putsch. Although hyperinflation has been blamed for damaging the credibility of democratic institutions, the Nazis did not assume government until 1933, ten years after the hyperinflation but in the midst of high unemployment. Rising unemployment has traditionally been regarded by the public and the media in any country as a key guarantor of electoral defeat for any government that oversees it. That was very much the consensus in the United Kingdom until 1983, when Thatcher's Conservative government won a landslide in the general election, despite overseeing a rise in unemployment from 1.5 million to 3.2 million since the 1979 election.


Benefits

The primary benefit of unemployment is that people are available for hire, without being headhunted away from their existing employers. That permits both new and old businesses to take on staff. Unemployment is argued to be "beneficial" to the people who are not unemployed in the sense that it averts inflation, which itself has damaging effects, by providing (in Marxian terms) a
reserve army of labour Reserve army of labour is a concept in Karl Marx's critique of political economy Political economy is the study of how economic systems (e.g. markets and national economies) and political systems (e.g. law, institutions, government) are l ...
, which keeps wages in check. However, the direct connection between full local employment and local inflation has been disputed by some because of the recent increase in
international trade International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy) In most countries, such trade represents a significant ...
that supplies low-priced goods even while local employment rates rise to full employment. Full employment cannot be achieved because workers would shirk if they were not threatened with the possibility of unemployment. The curve for the no-shirking condition (labelled NSC) thus goes to infinity at full employment. The inflation-fighting benefits to the entire economy arising from a presumed optimum level of unemployment have been studied extensively. The
Shapiro–Stiglitz model Joseph Eugene Stiglitz (; born February 9, 1943) is an American New Keynesian economist, a public policy analyst, and a full professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the Joh ...
suggests that wages never bid down sufficiently to reach 0% unemployment. That occurs because employers know that when wages decrease, workers will shirk and expend less effort. Employers avoid shirking by preventing wages from decreasing so low that workers give up and become unproductive. The higher wages perpetuate unemployment, but the threat of unemployment reduces shirking. Before current levels of world trade were developed, unemployment was shown to reduce inflation, following the
Phillips curve The Phillips curve is an economic model, named after William Phillips hypothesizing a correlation between reduction in unemployment and increased rates of wage rises within an economy. While Phillips himself did not state a linked relationship ...
, or to decelerate inflation, following the NAIRU/
natural rate of unemployment The natural rate of unemployment is the name that was given to a key concept in the study of economic activity. Milton Friedman and Edmund Phelps, tackling this 'human' problem in the 1960s, both received the Nobel Memorial Prize in Economic Scien ...
theory since it is relatively easy to seek a new job without losing a current job. When more jobs are available for fewer workers (lower unemployment), that may allow workers to find the jobs that better fit their tastes, talents and needs. As in the Marxian theory of unemployment,
special interests Advocacy groups, also known as interest groups, special interest groups, lobbying groups or pressure groups use various forms of advocacy in order to influence public opinion and ultimately policy. They play an important role in the developm ...
may also benefit. Some employers may expect that employees with no fear of losing their jobs will not work as hard or will demand increased wages and benefit. According to that theory, unemployment may promote general labour
productivity Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...
and
profitability In economics, profit is the difference between the revenue that an economic entity has received from its outputs and the total cost of its inputs. It is equal to total revenue minus total cost, including both explicit and implicit costs. It i ...
by increasing employers' rationale for their
monopsony In economics, a monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers. The microeconomic theory of monopsony assumes a single entity ...
-like power (and profits). Optimal unemployment has also been defended as an environmental tool to brake the constantly-accelerated growth of the GDP to maintain levels that are sustainable in the context of resource constraints and environmental impacts. However, the tool of denying jobs to willing workers seems a blunt instrument for conserving resources and the environment. It reduces the consumption of the unemployed across the board and only in the short term. Full employment of the unemployed workforce, all focused toward the goal of developing more environmentally-efficient methods for production and consumption, might provide a more significant and lasting cumulative environmental benefit and reduced
resource consumption Resource consumption is about the consumption of non-renewable, or less often, renewable resources. Specifically, it may refer to: * water consumption * energy consumption ** electric energy consumption ** world energy consumption * natural gas c ...
. Some critics of the "culture of work" such as the anarchist Bob Black see employment as culturally overemphasized in modern countries. Such critics often propose quitting jobs when possible, working less, reassessing the cost of living to that end, creation of jobs that are "fun" as opposed to "work," and creating cultural norms in which work is seen as unhealthy. These people advocate an "
anti-work Critique of work or critique of labour is the critique of, and wish to abolish, Work (human activity), work ''as such'', and to critique what the critics of works deem wage slavery. Critique of work can be Existentialism, existential, and focus o ...
" ethic for life.


Decline in work hours

As a result of productivity, the work week declined considerably during the 19th century. By the 1920s, the average workweek in the US was 49 hours, but it was reduced to 40 hours (after which overtime premium was applied) as part of the 1933
National Industrial Recovery Act The National Industrial Recovery Act of 1933 (NIRA) was a US labor law and consumer law passed by the 73rd US Congress to authorize the president to regulate industry for fair wages and prices that would stimulate economic recovery. It also ...
. During the Great Depression, the enormous productivity gains caused by
electrification Electrification is the process of powering by electricity and, in many contexts, the introduction of such power by changing over from an earlier power source. The broad meaning of the term, such as in the history of technology, economic histor ...
, mass production, and agricultural mechanization were believed to have ended the need for a large number of previously-employed workers.


Remedies

Societies try a number of different measures to get as many people as possible into work, and various societies have experienced close to full employment for extended periods, particularly during the post-World War II economic expansion. The United Kingdom in the 1950s and 1960s averaged 1.6% unemployment, and in Australia, the 1945 '' White Paper on Full Employment in Australia'' established a government policy of full employment, which lasted until the 1970s. However, mainstream economic discussions of full employment since the 1970s suggest that attempts to reduce the level of unemployment below the
natural rate of unemployment The natural rate of unemployment is the name that was given to a key concept in the study of economic activity. Milton Friedman and Edmund Phelps, tackling this 'human' problem in the 1960s, both received the Nobel Memorial Prize in Economic Scien ...
will fail but result only in less output and more inflation.


Demand-side solutions

Increases in the demand for labour move the economy along the demand curve, increasing wages and employment. The demand for labour in an economy is derived from the demand for goods and services. As such, if the demand for goods and services in the economy increases, the demand for labour will increase, increasing employment and wages. There are many ways to stimulate demand for goods and services. Increasing wages to the working class (those more likely to spend the increased funds on goods and services, rather than various types of savings or commodity purchases) is one theory that is proposed. Increased wages are believed to be more effective in boosting demand for goods and services than central banking strategies, which put the increased money supply mostly into the hands of wealthy persons and institutions. Monetarists suggest that increasing money supply in general increases short-term demand. As for the long-term demand, the increased demand is negated by inflation. A rise in fiscal expenditures is another strategy for boosting aggregate demand. Providing aid to the unemployed is a strategy that is used to prevent cutbacks in consumption of goods and services, which can lead to a vicious cycle of further job losses and further decreases in consumption and demand. Many countries aid the unemployed through social
welfare Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specifical ...
programs. Such unemployment benefits include
unemployment insurance Unemployment benefits, also called unemployment insurance, unemployment payment, unemployment compensation, or simply unemployment, are payments made by authorized bodies to unemployed people. In the United States, benefits are funded by a comp ...
,
unemployment compensation Unemployment benefits, also called unemployment insurance, unemployment payment, unemployment compensation, or simply unemployment, are payments made by authorized bodies to unemployed people. In the United States, benefits are funded by a comp ...
, welfare, and subsidies to aid in retraining. The main goal of such programs is to alleviate short-term hardships and, more importantly, to allow workers more time to search for a job. A direct demand-side solution to unemployment is government-funded employment of the able-bodied poor. This was notably implemented in Britain from the 17th century until 1948 in the institution of the
workhouse In Britain, a workhouse () was an institution where those unable to support themselves financially were offered accommodation and employment. (In Scotland, they were usually known as poorhouses.) The earliest known use of the term ''workhouse' ...
, which provided jobs for the unemployed with harsh conditions and poor wages to dissuade their use. A modern alternative is a job guarantee in which the government guarantees work at a living wage. Temporary measures can include
public works Public works are a broad category of infrastructure projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community. They include public buildings ( municipal buildings, sc ...
programs such as the
Works Progress Administration The Works Progress Administration (WPA; renamed in 1939 as the Work Projects Administration) was an American New Deal agency that employed millions of jobseekers (mostly men who were not formally educated) to carry out public works projects, i ...
. Government-funded employment is not widely advocated as a solution to unemployment except in times of crisis. That is attributed to the public sector jobs' existence depending directly on the tax receipts from private sector employment. In the US, the unemployment insurance allowance is based solely on previous income (not time worked, family size, etc.) and usually compensates for one third of previous income. To qualify, people must reside in their respective state for at least a year and work. The system was established by the Social Security Act of 1935. Although 90% of citizens are covered by unemployment insurance, less than 40% apply for and receive benefits. However, the number applying for and receiving benefits increases during recessions. For highly-seasonal industries, the system provides income to workers during the off-season, thus encouraging them to stay attached to the industry. According to classical economic theory, markets reach equilibrium where supply equals demand; everyone who wants to sell at the market price can do so. Those who do not want to sell at that price do not; in the labour market, this is classical unemployment. Monetary policy and fiscal policy can both be used to increase short-term growth in the economy, increasing the demand for labour and decreasing unemployment.


Supply-side solutions

However, the labor market is not 100% efficient although it may be more efficient than the bureaucracy. Some argue that minimum wages and union activity keep wages from falling, which means that too many people want to sell their labour at the going price but cannot. That assumes perfect competition exists in the labour market, specifically that no single entity is large enough to affect wage levels and that employees are similar in ability. Advocates of
supply-side Supply-side economics is a macroeconomic theory that postulates economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade. According to supply-side economics, consumers will benefit fr ...
policies believe those policies can solve the problem by making the labour market more flexible. These include removing the minimum wage and reducing the power of unions. Supply-siders argue that their reforms increase long-term growth by reducing labour costs. The increased supply of goods and services requires more workers, increasing employment. It is argued that supply-side policies, which include cutting taxes on businesses and reducing regulation, create jobs, reduce unemployment, and decrease labor's share of national income. Other supply-side policies include education to make workers more attractive to employers.


History

There are relatively limited historical records on unemployment because it has not always been acknowledged or measured systematically. Industrialization involves
economies of scale In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of output produced per unit of time. A decrease in cost per unit of output enables ...
, which often prevent individuals from having the capital to create their own jobs to be self-employed. An individual who cannot join an enterprise or create a job is unemployed. As individual farmers, ranchers, spinners, doctors and merchants are organized into large enterprises, those who cannot join or compete become unemployed. Recognition of unemployment occurred slowly as economies across the world industrialized and bureaucratized. Before that, traditional self-sufficient native societies had no concept of unemployment. The recognition of the concept of "unemployment" is best exemplified through the well documented historical records in England. For example, in 16th-century, England no distinction was made between
vagrants Vagrancy is the condition of homelessness without regular employment or income. Vagrants (also known as bums, vagabonds, rogues, tramps or drifters) usually live in poverty and support themselves by begging, scavenging, petty theft, tempora ...
and the jobless; both were simply categorized as " sturdy beggars", who were to be punished and moved on.


16th century

The closing of the
monasteries A monastery is a building or complex of buildings comprising the domestic quarters and workplaces of monastics, monks or nuns, whether living in communities or alone (hermits). A monastery generally includes a place reserved for prayer which ...
in the 1530s increased poverty, as the
Roman Catholic Church The Catholic Church, also known as the Roman Catholic Church, is the largest Christian church, with 1.3 billion baptized Catholics worldwide . It is among the world's oldest and largest international institutions, and has played a ...
had helped the poor. In addition, there was a significant rise in
enclosures Enclosure or Inclosure is a term, used in English landownership, that refers to the appropriation of "waste" or "common land" enclosing it and by doing so depriving commoners of their rights of access and privilege. Agreements to enclose land ...
during the
Tudor period The Tudor period occurred between 1485 and 1603 in England and Wales and includes the Elizabethan period during the reign of Elizabeth I until 1603. The Tudor period coincides with the dynasty of the House of Tudor in England that began wit ...
. Also, the population was rising. Those unable to find work had a stark choice: starve or break the law. In 1535, a bill was drawn up calling for the creation of a system of
public works Public works are a broad category of infrastructure projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community. They include public buildings ( municipal buildings, sc ...
to deal with the problem of unemployment, which were to be funded by a tax on income and capital. A law that was passed a year later allowed vagabonds to be whipped and hanged. In 1547, a bill was passed that subjected vagrants to some of the more extreme provisions of the criminal law: two years' servitude and branding with a "V" as the penalty for the first offense and death for the second. During the reign of Henry VIII, as many as 72,000 people are estimated to have been executed. In the 1576 Act, each town was required to provide work for the unemployed. The Elizabethan Poor Law of 1601, one of the world's first government-sponsored welfare programs, made a clear distinction between those who were unable to work and those able-bodied people who refused employment. Under the Poor Law systems of
England and Wales England and Wales () is one of the three legal jurisdictions of the United Kingdom. It covers the constituent countries England and Wales and was formed by the Laws in Wales Acts 1535 and 1542. The substantive law of the jurisdiction is Eng ...
,
Scotland Scotland (, ) is a Countries of the United Kingdom, country that is part of the United Kingdom. Covering the northern third of the island of Great Britain, mainland Scotland has a Anglo-Scottish border, border with England to the southeast ...
and
Ireland Ireland ( ; ga, Éire ; Ulster Scots dialect, Ulster-Scots: ) is an island in the Atlantic Ocean, North Atlantic Ocean, in Northwestern Europe, north-western Europe. It is separated from Great Britain to its east by the North Channel (Grea ...
, a
workhouse In Britain, a workhouse () was an institution where those unable to support themselves financially were offered accommodation and employment. (In Scotland, they were usually known as poorhouses.) The earliest known use of the term ''workhouse' ...
was a place people unable to support themselves could go to live and work.


Industrial Revolution to late 19th century

By 1776, some 1,912 parish and corporation workhouses had been established in England and Wales and housed almost 100,000 paupers. A description of the miserable living standards of the mill workers in England in 1844 was given by
Fredrick Engels Friedrich Engels ( ,"Engels"
''
The Condition of the Working Class in England ''The Condition of the Working Class in England'' (german: Die Lage der arbeitenden Klasse in England) is an 1845 book by the German philosopher Friedrich Engels, a study of the industrial working class in Victorian England. Engels' first book, ...
in 1844''. In the preface to the 1892 edition, Engels noted that the extreme poverty he had written about in 1844 had largely disappeared. David Ames Wells also noted that living conditions in England had improved near the end of the 19th century and that unemployment was low. The scarcity and the high price of labor in the US in the 19th century was well documented by contemporary accounts, as in the following: Scarcity of labor was a factor in the economics of
slavery in the United States The legal institution of human chattel slavery, comprising the enslavement primarily of Africans and African Americans, was prevalent in the United States of America from its founding in 1776 until 1865, predominantly in the South. Sl ...
. As new territories were opened and federal land sales were conducted, land had to be cleared and new homesteads established. Hundreds of thousands of immigrants annually came to the US and found jobs digging canals and building railroads. Almost all work during most of the 19th century was done by hand or with horses, mules, or oxen since there was very little mechanization. The workweek during most of the 19th century was 60 hours. Unemployment at times was between one and two percent. The tight labor market was a factor in productivity gains by allowing workers to maintain or to increase their nominal wages during the secular deflation that caused real wages to rise at various times in the 19th century, especially in its final decades.


20th century

There were labor shortages during
World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, the United States, and the Ottoman Empire, with fightin ...
. Ford Motor Co. doubled wages to reduce turnover. After 1925, unemployment gradually began to rise. The 1930s saw the Great Depression impact unemployment across the globe. In Germany and the United States, the unemployment rate reached about 25% in 1932. In some towns and cities in the northeast of England, unemployment reached as high as 70%; the national unemployment level peaked at more than 22% in 1932. Unemployment in Canada reached 27% at the depth of the Depression in 1933. In 1929, the U.S. unemployment rate averaged 3%. In the US, the
Works Progress Administration The Works Progress Administration (WPA; renamed in 1939 as the Work Projects Administration) was an American New Deal agency that employed millions of jobseekers (mostly men who were not formally educated) to carry out public works projects, i ...
(1935–43) was the largest make-work program. It hired men (and some women) off the relief roles ("dole") typically for unskilled labor. During the New Deal, over three million unemployed young men were taken out of their homes and placed for six months into more than 2600 work camps managed by the
Civilian Conservation Corps The Civilian Conservation Corps (CCC) was a voluntary government work relief program that ran from 1933 to 1942 in the United States for unemployed, unmarried men ages 18–25 and eventually expanded to ages 17–28. The CCC was a major part of ...
. Unemployment in the United Kingdom fell later in the 1930s as the Depression eased, and it remained low (in single figures) after
World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposing ...
. Fredrick Mills found that in the US, 51% of the decline in work hours was due to the fall in production and 49% was from increased productivity. By 1972,
unemployment in the United Kingdom Unemployment in the United Kingdom is measured by the Office for National Statistics. In the most recent three-month figures (July to September 2022) the unemployment rate was estimated at 3.6%, which is 0.2 percentage points lower than the pr ...
had crept back up above 1,000,000, and it was even higher by the end of the decade, with inflation also being high. Although the monetarist economic policies of
Margaret Thatcher Margaret Hilda Thatcher, Baroness Thatcher (; 13 October 19258 April 2013) was Prime Minister of the United Kingdom from 1979 to 1990 and Leader of the Conservative Party from 1975 to 1990. She was the first female British prime ...
's
Conservative Conservatism is a cultural, social, and political philosophy that seeks to promote and to preserve traditional institutions, practices, and values. The central tenets of conservatism may vary in relation to the culture and civilization in ...
government saw inflation reduced after 1979, unemployment soared in the early 1980s and in 1982, it exceeded 3,000,000, a level that had not been seen for some 50 years. That represented one in eight of the workforce, with unemployment exceeding 20% in some places that had relied on declining industries such as coal mining. However, it was a time of high unemployment in all other major industrialised nations as well. By the spring of 1983, unemployment had risen by 6% in the previous 12 months, compared to 10% in Japan, 23% in the US, and 34% in
West Germany West Germany is the colloquial term used to indicate the Federal Republic of Germany (FRG; german: Bundesrepublik Deutschland , BRD) between its formation on 23 May 1949 and the German reunification through the accession of East Germany on 3 O ...
(seven years before
Reunification A political union is a type of political entity which is composed of, or created from, smaller polities, or the process which achieves this. These smaller polities are usually called federated states and federal territories in a federal governm ...
). Unemployment in the United Kingdom remained above 3,000,000 until the spring of 1987, when the economy enjoyed a boom. By the end of 1989, unemployment had fallen to 1,600,000. However, inflation had reached 7.8%, and the following year, it reached a nine-year high of 9.5%; leading to increased interest rates. Another recession occurred from 1990 to 1992. Unemployment began to increase, and by the end of 1992, nearly 3,000,000 in the United Kingdom were unemployed, a number that was soon lowered by a strong economic recovery. With inflation down to 1.6% by 1993, unemployment then began to fall rapidly and stood at 1,800,000 by early 1997.


21st century

The official unemployment rate in the 16
European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...
(EU) countries that use the euro rose to 10% in December 2009 as a result of another recession. Latvia had the highest unemployment rate in the EU, at 22.3% for November 2009. Europe's young workers have been especially hard hit. In November 2009, the unemployment rate in the EU27 for those aged 15–24 was 18.3%. For those under 25, the unemployment rate in
Spain , image_flag = Bandera de España.svg , image_coat = Escudo de España (mazonado).svg , national_motto = ''Plus ultra'' (Latin)(English: "Further Beyond") , national_anthem = (English: "Royal March") , i ...
was 43.8%. Unemployment has risen in two thirds of European countries since 2010. Into the 21st century, unemployment in the United Kingdom remained low and the economy remaining strong, and several other European economies, such as France and Germany, experienced a minor recession and a substantial rise in unemployment. In 2008, when the recession brought on another increase in the United Kingdom, after 15 years of economic growth and no major rises in unemployment. In early 2009, unemployment passed the 2 million mark, and economists were predicting it would soon reach 3 million. However, the end of the recession was declared in January 2010 and unemployment peaked at nearly 2.7 million in 2011, appearing to ease fears of unemployment reaching 3 million. The unemployment rate of Britain's young black people was 47.4% in 2011. 2013/2014 has seen the employment rate increase from 1,935,836 to 2,173,012 as supported by showing the UK is creating more job opportunities and forecasts the rate of increase in 2014/2015 will be another 7.2%. The
2008–2012 global recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At t ...
has been called a "mancession" because of the disproportionate number of men who lost their jobs as compared to women. The gender gap became wide in the United States in 2009, when 10.5% of men in the
labor force The workforce or labour force is a concept referring to the pool of human beings either in employment or in unemployment. It is generally used to describe those working for a single company or industry, but can also apply to a geographic reg ...
were unemployed, compared with 8% of women. Three quarters of the jobs that were lost in the recession in the US were held by men. A 26 April 2005 ''Asia Times'' article noted, "In regional giant South Africa, some 300,000 textile workers have lost their jobs in the past two years due to the influx of Chinese goods". The increasing US trade deficit with China cost 2.4 million American jobs between 2001–2008, according to a study by the
Economic Policy Institute The Economic Policy Institute (EPI) is a 501(c)(3) non-profit American, left-leaning think tank based in Washington, D.C., that carries out economic research and analyzes the economic impact of policies and proposals. Affiliated with the labor mov ...
(EPI). From 2000–2007, the United States lost a total of 3.2 million manufacturing jobs. 12.1% of US military veterans who had served after the
September 11 attacks The September 11 attacks, commonly known as 9/11, were four coordinated suicide terrorist attacks carried out by al-Qaeda against the United States on Tuesday, September 11, 2001. That morning, nineteen terrorists hijacked four commer ...
in 2001 were unemployed as of 2011; 29.1% of male veterans aged 18–24 were unemployed. As of September 2016, the total veteran unemployment rate was 4.3 percent. By September 2017, that figure had dropped to 3 percent. About 25,000,000 people in the world's 30 richest countries lost their jobs between the end of 2007 and the end of 2010, as the economic downturn pushed most countries into
recession In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various ...
. In April 2010, the US unemployment rate was 9.9%, but the government's broader U-6 unemployment rate was 17.1%. In April 2012, the unemployment rate was 4.6% in Japan. In a 2012 story, the ''Financial Post'' reported, "Nearly 75 million youth are unemployed around the world, an increase of more than 4 million since 2007. In the European Union, where a debt crisis followed the financial crisis, the youth unemployment rate rose to 18% last year from 12.5% in 2007, the ILO report shows." In March 2018, according to US Unemployment Rate Statistics, the unemployment rate was 4.1%, below the 4.5–5.0% norm.


See also


Notes


References

* * * * * *


Historical: Europe and Japan

*, in Great Britain. * Broadberry, Stephen N., and Albrecht Ritschl. "Real Wages, Productivity, and Unemployment in Britain and Germany during the 1920s." ''Explorations in Economic History'' 32.3 (1995): 327-349. * Dimsdale, Nicholas H., Nicholas Horsewood, and Arthur Van Riel. "Unemployment in interwar Germany: an analysis of the labor market, 1927-1936." ''Journal of Economic History'' (2006): 778-808
online
* Heimberger, Philipp, Jakob Kapeller, and Bernhard Schütz. "The NAIRU determinants: What’s structural about unemployment in Europe?." ''Journal of Policy Modeling'' 39.5 (2017): 883-908
online
* Kato, Michiya. "Unemployment and Public Works Policy in Interwar Britain and Japan: An International Comparison." (2010): 69-101
online
* Kaufman, Roger T. "Patterns of Unemployment in North America, Western Europe and Japan." ''Unemployment in Western countries'' (Palgrave Macmillan, 1980). 3-35. * Nickell, Stephen, Luca Nunziata, and Wolfgang Ochel. "Unemployment in the OECD since the 1960s. What do we know?." ''Economic Journal'' 115.500 (2005): 1-2
online
* Stachura, Peter D., ed. ''Unemployment and the great depression in Weimar Germany'' (Springer, 1986). * Topp, Niels-Henrik. "Unemployment and Economic Policy in Denmark in the 1930s." ''Scandinavian Economic History Review'' 56.1 (2008): 71-90. *, in Great Britain


Historical: United States

* Jensen, Richard J. "The causes and cures of unemployment in the Great Depression." ''Journal of Interdisciplinary History'' 19.4 (1989): 553-58
online
* * Margo, Robert A. "Employment and Unemployment in the 1930s." ''Journal of Economic Perspectives'' 7.2 (1993): 41-59
online
* Stricker, Frank. ''American Unemployment: Past, Present, and Future'' (University of Illinois Press, 2020
online review
* Sundstrom, William A. "Last hired, first fired? Unemployment and urban black workers during the Great Depression." ''Journal of Economic History'' (1992): 415-429
online
* Temin, Peter. "Socialism and Wages in the Recovery from the Great Depression in the United States and Germany." ''Journal of Economic History'' (1990): 297-30
online


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