This lesson examines how U.S. unemployment changes over time and how unemployment rates differ across groups. These patterns help us understand how economic conditions affect workers and why the headline unemployment rate does not describe every person’s experience.
The U.S. unemployment rate rises and falls over time. It tends to be high during recessions and lower during periods of economic growth. Severe downturns have produced especially high rates: unemployment reached roughly 10% during the deep recessions of the early 1980s and 2007–2009. During the Great Depression of the 1930s, it reached almost 25% of the labor force. The pandemic-induced recession also caused a sharp rise in unemployment.
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What is the usual relationship between unemployment and the business cycle?
Unemployment generally rises during recessions and falls during economic expansions, though the response often lags behind changes in economic activity.
What does it mean for unemployment to lag a recovery?
The economy may begin growing before unemployment starts falling, because employers can delay hiring until they are confident that the recovery will continue.
Why can measured unemployment be very low among elderly people?
Many elderly people without jobs retire and leave the labor force. Because unemployment counts people who are in the labor force and seeking work, retirees are not counted as unemployed.
What is a re-entrant to the labor force?
A re-entrant is someone who returns to the labor force after a period away and is seeking work.
What does long-duration unemployment refer to in the November 2021 figures?
It refers to unemployment lasting over 27 weeks; this category represented 37.7% of unemployed people in the figures given.
Quiz questions
In 2019, how did unemployment rates in Japan and the United States compare?Answer: Japan was 2.4%; the United States was 3.7%.
If someone loses a job and stops looking for work, how are they generally classified in unemployment statistics?Answer: Outside the labor force, rather than unemployed.
Why may unemployment rates from different countries be difficult to compare directly?Answer: Countries may differ in definitions, survey methods, and labor-market institutions.
Why can the employed–unemployed distinction be difficult to apply in some lower-income countries?Answer: Informal, subsistence, and barter activities may not fit standard employment categories clearly.
What is a risk of comparing unemployment rates when a country's statistics are unreliable?Answer: The comparison may suggest more precision than the data support.
Based on Principles of Economics 3e by Steven A. Greenlaw, David Shapiro, Daniel MacDonald (OpenStax), licensed CC BY 4.0. Adapted into a summary, flashcards and quizzes.