of personal accomplishment. A job loss means a lower living standard in the present anxiety about the future and reduced self-esteem. It is not surprising, therefore, that politicians campaigning for office often speak about how their proposed policies will help create jobs. We begin by looking at some of the relevant facts that describe unemployment, such as, what unemployment is, the different types of unemployment and unemployment insurance. We then turn to the reasons why economies always experience some unemployment and the ways in which policymakers can help the unemployed. Explanations for the economy’s natural rate of unemployment: minimum-wage laws, unions, efficiency wages, and job search. What is Unemployment? Unemployment is the state of a person who wants to work but does not have a job. The term does not refer to people who are not seeking work because of age, illness, or a mental or physical handicap. Nor does it refer to people who are attending school or keeping house. Such persons are classified as out of the labor force rather than unemployed. Unemployment involved serious problems for both the individual and society as a whole. For the individual it means loss of income, and in many cases, loss of self-respect. For society, it results in lost production and in some cases, criminal or other antisocial behavior. Until the 1900’s, most people considered laziness the main cause of unemployment. But today, they realize that men and women may be out of work through not fault of their own. Why is There Unemployment? Economists experience unemployment because, in most markets in the economy, prices adjust to bring quantity supplied and quantity demanded into balance. In an ideal labor market, wages would adjust to balance the quantity of labor supplied and the quantity of labor demanded. This adjustment of wages would ensure that all workers are always fully employed. Of course, reality does not resemble this ideal. There are always some workers without jobs, even when the overall economy is doing well. In other words, the unemployment rate never falls to zero; instead it fluctuates around the natural rate of unemployment. Measuring Unemployment The Bureau of the Census in the Department of Commerce collects and tabulates unemployment statistics in the United States. The Bureau of Labor Statistics in the Department of Labor analyzes and publishes the statistics. Every month, agents of the bureau visit a certain number of households in all parts of the country. They ask whether the members of each household who are 16 or older have jobs or are looking for work. The answers provide the basis for a monthly estimate of the nation’s total labor force that is unemployment. Businessmen, economists, and government officials study the reports for indications of the nation’s economic health. The annual United States unemployment rate represents the average of the monthly figures for a certain year. It shows the average number of persons unemployed during the year, but not the total number who had some unemployment. In 1982, the average number of unemployed was over 10 million. But about twice that number were jobless at least one week during the year. The unemployment rate varies greatly among various groups. It tends to be several times as high for teenaged workers as for older persons. Unskilled people experience about three times as much unemployment as do white-collar workers. The unemployment rate among blacks is about twice that among whites. Economists disagree on the meaning of the unemployment rate. Some believe the rate exaggerates the problem because it includes persons who want only part-time jobs. Others argue that it underestimates the problem because it does not include discouraged workers who have stopped looking for jobs or workers

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