Why Does Unemployment Rise During A Recession
During a recession a rash of business failures occurs. Why these business failures happen is explained by various economic theories as a result of negative economic shocks, real resource or credit crunches brought about by previously over-expansionary monetary policy, the collapse of debt-based asset price bubbles, or a negative shift in consumer or business mood. Regardless of the cause, as the recession spreads, more and more businesses curtail their activities or fail altogether and as a result lay-off their workers.
During a recession many businesses lay-off employees at the same time, and available jobs are scarce.
When businesses fail, under the normal operation of markets the assets of the business are sold off to other businesses and the former employees are rehired by other competing businesses. In a recession, because many businesses across many different industries and markets are failing all at once, the number of unemployed workers looking for new jobs goes up rapidly. The available supply of labor available for immediate hire goes up, but the demand to hire new workers by businesses goes down. In a perfect, frictionlessly functioning market, economists would expect such an increase in supply and decrease in demand to result in a lower price but not necessarily a lower total number of jobs once the price adjusts.
Workers Are Protected From Discrimination For Raising Safety Complaints
Workers in Washington who refuse to perform unsafe job duties may be protected from discrimination under Washington Industrial Safety and Health Act requirements as administered through the Department of Labor and Industries .
Workers who are retaliated against for filing a complaint, or for bringing up safety concerns to their employer,may file a complaint.
Different Types Of Labor
For simplicitys sake, economists and statisticians routinely ignore the differences between various inputs to productive business processes in order to produce aggregate macroeconomic statistics that help measure overall economic performance, such as the aforementioned GDP and unemployment rates. While these broad, abstract numbers may have some use, they obscure the fact that there are many different types of workers, with various combinations of skills, experience, and know-how, that makes their labor more-or-less useful to different sorts of employers engaged in different types of business, in different locations, with different types of tools and capital equipment. This key aspect of labor markets explains much of cyclical unemployment.
Some industries and businesses are harder hit than others in any given recession. For example during the Great Recession, construction, manufacturing, and the finance, insurance, and real estate sectors saw the greatest increases in unemployment.
This process of sorting the right workers into the right jobs takes time, and requires simultaneously sorting the right tools, equipment, buildings, and other capital to complement those workers skills and abilities into the hands of businesses that can use all these resources together in legitimately productive activities.
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Worksource Assists Job Seekers And Businesses
Employment Security is a proud partner in the statewide WorkSource system, which provides employment and training assistance to job seekers and businesses. WorkSourceWA.com provides access to thousands of Washington jobs and other employment resources. WorkSource staff can connect you with employers hiring right now in your community, identify training opportunities or help you brush up on your application and interview skills. Find your nearest WorkSource center on the WorkSource office locator page.
Employment Insurance And Minimum Wage
There is some evidence that the natural or average level of frictional unemployment increased in the 1960s and 1970s, not only because of demographic changes but also because of changes in social legislation. In particular, the major increases in the generosity of unemployment insurance in 1971 are said by some critics to have induced higher unemployment. However, there is little consensus on the effects of employment insurance on the unemployment rate.
Some economists have also pointed to higher minimum wages as leading to more difficulty for the relatively unskilled in obtaining both work and on-the-job training. Lack of on-the-job training can make things especially difficult for new entrants to the labour force, particularly the young. Youth unemployment rates have always been higher than the average and it is hardly surprising that initial and early job searches are often more extensive.
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What The Us Unemployment Rate Doesnt Tell You
The true measure of unemployment depends on who you ask
Just how healthy is the US jobs market? On Friday, the Bureau of Labor Statistics released its latest jobs report, showing that the US added a disappointing 194,000 jobs last month while announcing that the official unemployment rate fell to 4.8%, the lowest its been since its frightening climb to 14.7% when the Covid-19 pandemic first struck the US.
The figures seem somehow disconnected and, for some, Septembers headline figure is woefully misleading, as it is every month. What if the true unemployment rate is actually closer to 22%?
Unemployment Rate Down As Americans Give Up On Work
The U.S. unemployment rate is down, but that is because many Americans have given up or — better yet — are struggling to find full-time work.
Dean Baker, an economist with the Center for Economic Policy Research in Washington, said Friday that the decline in U.S. labor force participation in this recent data release was “striking.”
“We know that a lot more people in their prime working years are opting to neither work nor look for work,” Baker told me. “Unless they have suddenly gotten an aversion to work or had some conversion so that they no longer value material things, they likely have given up looking for work because they don’t see any jobs out there.”
The unemployment rate has dropped more than 40% of the way back to its pre-recession level, but the employment-to-population ratio is closer to its trough than its pre-recession peak. In English: fewer Americans are looking for employment.
While women have fared better than men in the job market, this is mostly because they did not take the same hit to employment at the start of the downturn in late 2008 early 2009, Baker said today.
Friday employment numbers were much better than economists’ expectations, but the numbers still show a weak job market four years into the economic recovery.
The Bureau of Labor Statistics data show workers remain discouraged and many are unable to find full time employment, or have given up trying to.
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Breaking Down Unemployment In Other Ways
The Bureau of Labor Statistics also gives information about the reasons for being unemployed as well as the length of time individuals have been unemployed. Table 2, for example, shows the four reasons for being unemployed and the percentages of the currently unemployed that fall into each category. Table 3 shows the length of unemployment. For both of these, the data is from February of 2015.
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Has Unemployment Gone Up Or Down
Harriet Harman and David Cameron clashed over whether unemployment had gone up or down at today’s prime minister’s questions. Channel 4 News’s FactCheck separates the fact from the fiction.
The claimHarriet Harman MP, PMQs, 16 June 2010
The backgroundDavid Cameron and his opponent, acting Labour leader Harriet Harman, seemed to be reading from different sets of figures at todays prime ministers questions. The pair clashed heatedly, and repeatedly, over whether unemployment had gone up or down.
First off, the PM described new unemployment figures out today as a “mixed picture”. The claimant count is down, he said, but the International Labour Organisation measure is up by 23,000. The claimant count is the number of people on unemployment benefit. The ILO unemployment figure is a respected international measure of the number of people who are actively looking for work, whether or not theyve signed on.
But Harman disagreed with Camerons second point: ILO unemployment is down on last month, she said.
Cameron said she was “just wrong” on the figures, but Harman made the claim again. saying he “hadnt listened to what shed said”.
FactCheck was listening and went back to check the numbers. Whos right?
The analysisNo one disputed today that the number of people on the dole the claimant count fell between April and May. The disagreement centres on the broader ILO measure of unemployment, which includes all of those looking for a job.
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Unemployment Rates By Group
Unemployment is not distributed evenly across the U.S. population. Figure 2 shows unemployment rates broken down in various ways: by gender, age, and race/ethnicity.
Figure 2.
The unemployment rate for women had historically tended to be higher than the unemployment rate for men, perhaps reflecting the historical pattern that women were seen as secondary earners. By about 1980, however, the unemployment rate for women was essentially the same as that for men, as shown in Figure 2 . During the recession of 2008-2009, the unemployment rate for men exceeded the unemployment rate for women. Through 2014, this pattern has remained, although the gap is narrowing.
Read this report for detailed information on the recession of 20082009. It also provides some very useful information on the statistics of unemployment.
Younger workers tend to have higher unemployment, while middle-aged workers tend to have lower unemployment, probably because the middle-aged workers feel the responsibility of needing to have a job more heavily. Younger workers move in and out of jobs more easily. Elderly workers have extremely low rates of unemployment, because those who do not have jobs often exit the labor force by retiring, and thus are not counted in the unemployment statistics. Figure 2 shows unemployment rates for women divided by age the pattern for men is similar.
Given The Measurement Problems During The Pandemic Are There Alternatives To The Bls Indicators Of Slack To Gauge The Health Of The Labor Market
Some economists have offered their own estimates of labor market slack trying to account for the misclassification and unusual movements in labor force participation during the pandemic. For example, Jason Furman and Wilson Powell III at the Peterson Institute for International Economics calculate what they call the realistic unemployment rate. Their realistic unemployment rate was 8.3 percent in January, two percentage points higher than the official unemployment rate. Furman and Powells realistic unemployment rate differs from the official in two ways. First, they estimate the number of workers misclassified as being not at work for other reasons and count them as unemployed. Second, they try to estimate the excess decline in labor force participation beyond what would be expected given the rise in unemployment, and add those people to the unemployment rate as well. While this estimate is dependent on the specific modeling assumptions, it is nonetheless a useful attempt to reveal the extent to which we underestimate the true disruption to peoples livelihoods if we fail to account for the unusually large drop in labor force participation.
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What Is The Relationship Between Initial Claims And The Unemployment Rate And Why Might It Be Different Now
The number of people receiving UI and the number counted as unemployed do tend to move in the same direction, but there is no formal link between the two. The only criteria for being counted as unemployed are that you are without a job and that you have actively searched for work or are on temporary layoff. You dont need to be collecting unemployment insurance to be counted as unemployed. And some people are eligible to collect partial unemployment insurance benefits if they are working but have been assigned a schedule that is far below their usual weekly hours.
Many people who become unemployed do not apply for UI benefits, either because they are not eligible or because they choose not to apply. So initial claims typically understate the number of people becoming unemployed in a given week. That said, there are people who file an initial claim and are not counted as unemployed in the CPS. This could happen if a person doesnt meet the CPS criteria for being unemployedfor instance, if they file for UI because their work schedule was reduced, or if the person has a very short spell of unemployment which is not captured in the CPS .
Causes Of Rural Unemployment
In developing nations, more than 50 percent of the population lives in rural areas. For the rural community, agriculture is the primary job for the people. Rural people do not get the right agricultural jobs, plus they do not get the proper access to education and skills required for getting top-level positions.
Causes for Rural Unemployment
- Traditional and un-advanced methods of agriculture
- Lacking adequate means of irrigation
- The habit of staying at home
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Unemployment Rate Surges With More Than 40000 Jobs Lost In September
Australias unemployment rate surged last month to 5.2 per cent, up from 4.6 per cent in September, but the Australian Bureau of Statistics is taking this as a sign of confidence people are preparing to go back to work as lockdowns ended across the nation.
The ABS estimates that 46,000 jobs were lost during the same period, but says the increase in unemployment actually showed people were preparing to get back to work, with the participation rate inching higher.
increasingly available and actively looking for work particularly in NSW, Victoria and the ACT, the bureaus head of labour statistics Bjorn Jarvis said.
This follows what we have seen towards the end of other major lockdowns, including the one in Victoria late last year.
It may seem counterintuitive for unemployment to rise as conditions are about to improve. However, this shows how unusual lockdowns are, compared with other economic shocks, in how they limit being able to work and look for work.
Mr Jarvis said the national participation rate had crept up by 0.1 percentage points to 64.7 per cent in October but was 1.6 percentage points below May.
While unemployment rose in NSW, Victoria, the ACT, Queensland, South Australia and Tasmania, it fell in Western Australia and the Northern Territory.
Given the Sydney lockdown ended on October 11 and Melbournes on October 22, the full impact of that reopening wont be seen until November data is released next month.
Who Is Becoming Unemployed
Young people have been particularly badly hit by the pandemic.
Shops, pubs, restaurants and entertainment were unable to fully open and these are areas where lots of young people work.
Over the past year the number of under-25s on company payrolls fell by 289,000.
Record numbers of young people are also choosing to stay in education, and are not looking for work.
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The Future Of The United States Depends On The Immediate Adoption Of Ubi
Flaten the curve
Weve heard that phrase repeatedly as a result of the novel coronavirus in regards to the healthcare system. There are only so many healthcare workers, only so many hospitals with a limited number of rooms and beds, only so many ventilators and PPE. Because of these limits, we have to avoid surpassing them by stretching out the number of coronavirus infections over a longer amount of time.
Weve heard that phrase repeatedly as a result of the novel coronavirus in regards to the healthcare system. There are only so many healthcare workers, only so many hospitals with a limited number of rooms and beds, only so many ventilators and PPE. Because of these limits, we have to avoid surpassing them by stretching out the number of coronavirus infections over a longer amount of time.Flattening that particular curve is something the public and governments both understand. A curve understood by far too few however is our safety nets. There are only so many welfare workers, only so much website capacity, only so many phone lines and people to answer them. Because of these limits, we should avoid surpassing them too, by avoiding millions of people applying simultaneously for welfare programs as a result of their incomes evaporating, as spending on goods and services grinds to a crawl.
The new social contract is ours to write, ours to sign, and ours to start living by in the future that we build from this day forward.
Scott Santens, April 8th 2020
Difference Between The Unemployment And Jobs Reports
The unemployment rate and figures from the jobs report don’t always tell the same story because they are taken from two different surveys.
The unemployment rate is taken from the household survey of individuals. It describes who is employed and who isn’t based on their responses.
The number of jobs added is taken from the establishment report, more commonly called the nonfarm payroll report. This survey of businesses describes how many jobs were created or lost by industry.
Since these reports are taken from completely different sources, the number of unemployed doesn’t match the number of jobs lost. Those discrepancies are expected, and the estimates are revised each month as more data comes in.
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Us Job Growth Picks Up In October Unemployment Rate Falls To 46%
A Brandon Motor Lodge displays a “Help Wanted” sign in Brandon, Florida, U.S., June 1, 2021. REUTERS/Octavio Jones
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- Nonfarm payrolls forecast increasing 450,000 in October
- Unemployment rate seen falling to 4.7% from 4.8%
- Average hourly earnings forecast rising 0.4%
WASHINGTON, Nov 5 – U.S. employment increased more than expected in October as the headwind from the surge in COVID-19 infections over the summer subsided, offering more evidence that economic activity was regaining momentum early in the fourth quarter.
Nonfarm payrolls increased by 531,000 jobs last month, the Labor Department said in its closely watched employment report on Friday. Data for September was revised higher to show 312,000 created instead of the previously reported 194,000.
Economists polled by Reuters had forecast payrolls rising by 450,000 jobs. Estimates ranged from as low as 125,000 jobs to as high as 755,000. Worker shortages persisted, even as federal government-funded unemployment benefits wound down in early September and schools reopened for in-person learning.
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Still, the report joined rising consumer confidence and services sector activity in painting a more favorable picture of the economy, after the Delta variant of the coronavirus and economy-wide shortages of goods restrained growth in the third quarter to its slowest pace in more than a year.
