EconExtra is a series of posts that go beyond the textbook, relating current events and recent developments in economics to content standards, and providing resource suggestions to help you incorporate the current events into your lessons.

#1 The Issue

Employment and unemployment statistics are regular headline news these days. (CEE Content Standard 8) Most people have a very limited knowledge of how each one is calculated—who is counted and who is not. (Except for the weekly initial jobless claims, the statistic is not an actual count of people in each category.)  And when any single measure is viewed without any comparison to history, it can leave one with an incomplete picture. For example, unemployment figures do not include underemployed or discouraged workers. And during the current pandemic, employment figures have not been a good proxy for financial welfare, as those who were successful at getting unemployment benefits were able to manage, but employed people for whom shifts/hours have been cut received no aid to fill the gap in their income. And what about “gig” workers? And what happens when unemployment benefits run out? And what other fiscal measures have been taken to prevent or delay negative impacts of lost income, like evictions and loan defaults? It is difficult to get a clear picture.

#2 Employment and Unemployment Measures Defined

Initial and continuing jobless claims are reported weekly by the US Department of Labor and measure the number of people who have filed for unemployment benefits for the first time (initial) or again (continuing.) The data come from the states, as people file for unemployment at a state, not federal, level. (The fact that for a time, there was a federal supplemental unemployment benefit makes this confusing.) States were overwhelmed initially with the number of claims filed, and these processing delays and other reporting quirks led have led to some concern that this measure was incomplete. Furthermore, this figure will not include unemployed people who are not eligible for benefits, have not applied for benefits, or for whom benefits have run out, and therefore is an imprecise measure. (These claim figures often get revised the following week.)

The Unemployment Rate is measured by the Bureau of Labor Statistics and is based on a survey of 60,000 eligible households and reported monthly. These people are interviewed once a month (read BLS publication to understand more about the household selection process and interview questions.) Participants are categorized as “employed” or “unemployed” based on their answers to a series of questions. According to the BLS:

The employed are:

• All those who did any work for pay or profit during the survey reference week.
• All those who did at least 15 hours of unpaid work in a business or farm operated by a family member with whom they live.
• All those who were temporarily absent from their regular jobs because of illness, vacation, bad weather, labor dispute, or various personal reasons, whether or not they were paid for the time off.

The unemployed are:

• All those who did not have a job at all during the survey reference week, made at least one specific active effort to find a job during the prior 4 weeks, and were available for work (unless temporarily ill).
• All those who were not working and were waiting to be called back to a job from which they had been laid off. (They need not be looking for work to be classified as unemployed.)

These figures do not get revised. In fact, in June it was reported that the BLS mistakenly reported 4.9 million of 5.4 million furloughed workers in May as “employed” rather than “unemployed.” (Newsweek) May’s unemployment rate was more like 16.2% (versus the reported 13.3%), and April was also underreported (19.9% versus the reported 14.7%.)

Labor Force Participation is simply the sum of the employed and unemployed people as a percentage of the “civilian, noninstitutional” population over 16.

The Monthly Jobs Report is based on a survey of 150,000 business establishments.  It is the estimate of jobs added (or lost) during the previous month. The report often gets sizable revisions month to month, and certain categories of self-employed people are not included.   

#3 Resources 

• A good introduction to the topic would be the Econ Lowdown video from the St. Louis Fed.  All but the last two terms listed under activities are explained in this video
• Investopedia provides definitions of employment terms, and the BLS documents the process for the measures it provides, including great detail on the survey methodology.

#4 Activity suggestions

Here is a list of terms that are covered by the video and section #2 above:

Unemployed

            Frictional unemployment

            Cyclical unemployment

            Structural unemployment

Employed

Out of the Labor Force

Underemployed

Discouraged Worker

Labor Force Participation Rate

Initial jobless claims

Monthly Jobs Report

Choose your matching game(s)

• Match statistic with its graph using FRED.  (Obviously you would exclude the series title.)

• Match graphs of the same statistic over two different time periods. This is easy to create using FRED data using either the slider at the bottom or date range at the top. (Example below)

• Match hypothetical employment situations with the category “employed,” “unemployed,” “Out of the labor force,” “underemployed” or “discouraged worker.” More than one might apply. (Examples below)

Situation:

1) Matt is unhappy at his current job. He is looking for a new job.

2) Martha graduated last spring with a degree in business. She is currently working a temp job as a bookkeeper 20 hours per week but is looking for a full-time job in finance.

3) Max and his wife just had a baby. His wife is going back to work and Max has decided to take an indefinite leave of absence from work and stay home to care for the baby.

4) Madison lost her job at a local restaurant at the beginning of the Pandemic and after six months of looking for work, she has stopped looking while considering her options.

5) Mia is 17 and is looking for a part-time job to earn money for college while she is finishing high school.

6) Mitch is temporarily laid off from his job at a high tech manufacturing plant because of difficulty getting parts.  He is using his time to paint his house.

7) Manny was just offered a job at a retail business, but has not been able to start work because he is under quarantine after his housemate came down with Covid.

Answers:

1) employed

2) employed/underemployed

3) out of the work force

4) out of the work force, discouraged worker

5) unemployed

6) unemployed

7) employed

Kick off or finale

The FinCap Friday from April called "When Life Gives You Lemons" would be appropriate for this unit, as Yanely discusses handling a job loss during the pandemic.

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