hey internet this is jacob clifford and
welcome to my youtube channel the u.s
a record-breaking spike in unemployment
in 2020.
actually unemployment was higher back in
the 1930s during the great depression
but back then it took two years
for unemployment to get around 15 in
2020
it took two months and the new numbers
just came out last week so now the
unemployment rate
is 8.4 that's better but is it good and
how is unemployment measured well
it's time to find out
in the u.s crunching the unemployment
rate numbers is the job of the bureau of
labor statistics the bls
the first friday of every month they
post the numbers and issue a report now
you can call me an econ geek but that
report is super interesting and includes
a lot of stuff you know
to pass an econ class so like i said the
unemployment rate in august of 2020 fell
to 8.4
in other words things are getting better
but they're not good
the equation for the unemployment rate
is the number of people who are
unemployed divided by the number of
people in the labor force
times 100. in your class you got to feel
comfortable calculating the unemployment
rate but there's a bunch of other things
that you got to know the first thing is
that not everyone without a job
counts as unemployed the unemployment
numbers only look at people who are
actively looking for work so if you stop
looking for a job
or if you don't even want a job you're
not considered unemployed because you're
not part
of the labor force the labor force is
the number of people that are actively
looking for a job or have a job so the
unemployed
and the employed they're at least 16
years old not institutionalized in other
words not in jail or in a mental
hospital
and not in the military and the labor
force participation rate is the number
of people in the labor force
divided by the working age population
times 100. now i know i covered that
really quick
so here's a recap and a visual the total
population includes everyone including
little kids
and super old people that just can't
work when you take them out you get the
working age population but that includes
people who don't want a job like
full-time students
or stay-at-home moms and when you take
them out you end up with the labor force
and the labor force participation rate
and it's inside the labor force that you
see the number of people who are
actively looking for a job but they
don't have one
and that gives you the unemployment rate
and of course that unemployment rate can
go up or down and that shows you what's
happening
in the overall economy simple but
there's still a couple of problems
the first one is that part-time workers
are considered fully employed so if you
have a job working 40 hours a week and
that gets cut down to only 10 hours a
week you're still considered fully
employed and you're not
unemployed even if you're looking for
another job to make ends meet the bls
actually tracks all this stuff but the
point is if people are moved
involuntarily to part-time work
and they're underemployed that still
doesn't affect the official unemployment
numbers and the second issue is when
people stop
looking for a job i can't do this
anymore man
my head's about to explode these
individuals are called discouraged
workers and they're no longer considered
unemployed
because they left the labor force so if
a chunk of people
leave the labor force because they're so
frustrated they're so angry they can't
get a job
that'll actually cause the unemployment
rate to fall and that would actually
make the economy look like it's doing
better
even though it's totally not again the
bls tracks all this but it's something
to keep
in mind the official unemployment rate
is good it's important but you have to
actually look at the numbers to figure
out what's happening
in the real economy got it kind of in
the beginning i mentioned that this
spike in unemployment was
record-breaking
but this was too before the pandemic the
u.s had the lowest unemployment rate
since the 1950s but notice
it didn't get down to zero percent
economists focus on three types of
unemployment and two of them
always exist even when the economy is
doing great the first type is frictional
unemployment that's temporary
unemployment like when people switch
jobs
when they first enter the labor force do
you hear i finally graduated
yeah in just a shade under a decade too
all right you know a lot of people go to
college for seven years
i know they're called doctors this
type's always gonna exist because people
are gonna be leaving their jobs and
switching their jobs but remember
this is temporary the second type is
structural unemployment and that's
long-term unemployment because workers
don't have the right skills
technological improvements make some
jobs
obsolete and that causes structural
unemployment sometimes a robot just does
it better
again these two types of unemployment
always exist and together
they make up the natural rate of
unemployment this is the amount of
unemployment that exists
even when the economy is doing great so
we have frictional and structural
unemployment
we're at full employment now that's
actually a little different for every
country but in the u.s
the natural rate of unemployment is
somewhere between four
and six percent so what's happening here
when we're above six percent
well that's the third type of
unemployment cyclical unemployment
this is the result of a downturn in the
economy workers aren't losing their jobs
because they're between jobs
or because machines do it better they're
losing their job because of a recession
during the pandemic people couldn't go
out to eat so restaurant owners had to
lay off their servers
and their cooks and that caused a spike
in unemployment
that's cyclical unemployment now i've
got something that's going to help you
remember this idea of frictional and
structural and cyclical unemployment a
quick search on the internet will show
you there's kind of an unofficial icon
or symbol
of 2020. it's a dumpster fire to help
you remember these concepts i have for
you
a dumpster unemployment is like a
dumpster it's just a fact of life it's
ugly
and it's always there sometimes people
are going to get canned so having a
dumpster around like frictional and
structural employment
it's totally normal it's natural but a
dumpster fire
that's something different and that's
what we have here in 2020
cyclical unemployment
but don't go anywhere there's still two
things we have to do number one if you
like this video if i'm helping you learn
and love economics please subscribe
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you this semester and the second thing
we have to do
it's time for a pop quiz
[Music]
at the end of these videos i put a few
practice multiple choice questions to
make sure you're actually getting it
also if you need more help
take a look my ultimate review pack it
has a practice sheet it's going to help
you make sure you do the calculations
for unemployment
labor force participation rate and all
that stuff the link is in the
description below and the best part it's
free to start
right now good luck on these practice
questions make sure to look in the
comments below
for the right answers thanks for
watching my videos until next time
you