26 Labor Market Categories

Special Activity — Understanding Labor Market Categories

Some fictional examples of typical responses that may result in a person being classified as unemployed are:

  • Yvonne reported that two weeks ago she applied for jobs at a bank and at a mortgage lending company. She currently is waiting to hear back from both businesses. Yvonne is unemployed because she made a specific effort to find a job within the prior four weeks and is presently available for work.
  • Ms. Jenkins tells the interviewer that her teenage daughter, Katherine, was thinking about looking for work in the prior four weeks but knows of no specific efforts she has made. Katherine does not meet the activity test for unemployment and is, therefore, counted as not in the labor force.
  • John has been checking for openings at a local warehouse store for each of the past three weeks, but last week he had the flu and was unavailable for work because of it. John is counted as unemployed because he took steps to look for work and would have been available for work during the survey reference week, except for his temporary illness.
  • Marcus was laid off from the local plant of a major automaker when the firm began retooling to produce a new model car. Marcus knows he will be called back to work as soon as the model changeover is completed, and he also knows it is unlikely that he would be able to find a job for the period he is laid off. So, although he is available to work, he is not seeking a job. Marcus is unemployed because he is waiting to be recalled from layoff.
  • Julia told the interviewer that she has submitted applications with three companies for summer jobs. However, it is only April and she doesn’t wish to start work until at least June 15, because she is attending school. Although she has taken specific steps to find a job, Julia is classified as not in the labor force because she is not currently available for work. (She could not have started a job if one had been offered.) Students are treated the same as other persons; that is, they are classified as employed or unemployed if they meet the criteria, whether they are in school on a full- or part-time basis.
  • James and Elyse are high school students. James works after school at a fast food restaurant, and Elyse is seeking a part-time job at the same establishment (also after school). James’ job takes precedence over his non-labor force activity of going to school, as does Elyse’s search for work; therefore, James is counted as employed and Elyse is counted as unemployed.
  • Last week, Megan, who was working for a comic book store, went to a home electronics store on her lunch hour to be interviewed for a higher paying job. Megan’s interview constitutes looking for work, but her work takes priority, and she is counted as employed. (Indeed, because the questionnaire does not ask about job search by the employed, information about Megan’s search for work is not even obtained.)
  • Mike has a job at a fabricated metal manufacturer, but he didn’t go to work last week because of a strike at the plant. Last Thursday, he went to a machinery manufacturing company to see about getting a temporary job until the strike ends. Mike was with a job but not at work due to a labor dispute, which takes priority over looking for work; therefore, he is counted as employed. (Again, information would not be obtained on Mike’s job search effort.)
  • Avery lost her full-time job at a bookstore on Wednesday of the survey reference week. She submitted several applications with other local retailers on Thursday and Friday, but had not obtained a new job by the end of the week. Avery is counted as employed, since she did work for three days in the reference week, even though she was unemployed for part of the week. Once again, information would not be obtained on her search for work, though Avery would be identified as working part time for economic reasons also called “involuntary part time,” by virtue of having her workweek reduced to part time—defined as less than 35 hours per week—by her dismissal from her previous job. (9)

Labor Market Trends and Fluctuations

Unemployment Rate

Since 1929, the unemployment rate in the United States has averaged 7.2 percent. Since 1948, the average U.S. unemployment rate has been 5.8 percent, with much higher rates during the Great Depression and the 1973-1975, 1981-1982, and 2008-2009 recessions and lower rates during the expansions of the 1960s and 1990s. (11)(12)

The Labor Force Participation Rate

Since 1960, the labor force participation rate for men has decreased and for women has increased. In 2011 the labor force participation rate for men — about 70 percent — remains higher than that for women — about 60 percent. The overall labor force participation rate has increased from about 59 percent in 1960 to about 67 percent in 2009. It did drop below 64 percent by 2013, after the Great Recession. (11)(12)


Icon for the Creative Commons Attribution 4.0 International License

Principles of Macroeconomics Copyright © by Lumen Learning is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

Share This Book