3 Types of Unemployment and What They Mean

Last updated on: April 26, 2011 at 7:00 am by Tim

3 Types of Unemployment and What They Mean 2011-04-26T07:00:41-05:00 Tim

LOGO Patheos Explore the world's faith through different perspectives on religion and spirituality! Patheos has the views of the prevalent religions and spiritualities of the world.

There are three basic types of unemployment: frictional, structural, and cyclical. Before each is explored, it’s important to understand where the unemployment figures are derived from.

Measuring Unemployment

The labor force is comprised of three categories: employed persons, unemployed persons, and those not in the labor force at all.

Employed – An employed person is anyone surveyed by the Department of Labor who has held a job in the week prior to their interview or has a job but is absent (sick, vacation, or on strike).

Unemployed – An unemployed person has not worked in the previous week, but has made an attempt to find a job in the last month. This category also includes someone who is laid off or is waiting to report to a new job in the next 30 days.

Not in the labor force – Anyone not in the two categories above. This includes students, non-working spouses, or people who have stopped looking for work altogether.

Types of Unemployment

Frictional Unemployment – This type of unemployment happens because of ‘normal’ workings of an economy. When a person quits to find a better job or when they’re fired and look for a more suitable job, this is called frictional unemployment. It can also happen if consumers shift their demand towards a new product, thus eliminating the need for so many workers in a field. The same is true if technology improves and makes the skills of some workers unnecessary.

Structural Unemployment – As it sounds, this type is caused by significant changes in the structure of an industry. Substantial changes in industry, location, or even seasonal changes can cause structural unemployment. Generally these changes force workers out of a job because the cost to relocate or adjust is simply too much.

Cyclical Unemployment – Downturns in the economy generally account for cyclical unemployment. When the number of unemployed workers exceeds the number of job positions available in an economy, that’s usually a sign of cyclical unemployment. The Keynesian approach to reducing this type of unemployment is to pump money into an economy via government stimulus. The Austrian or free-market view is to let the markets work efficiently and keep the government from intervening and potentially slowing down the recovery.

The current stats on unemployment can be found at the Bureau of Labor Statistics website. The unemployment rate as of March 2011 was 8.8%. This is slightly lower than the average rate of 9.6% held in 2010.

Now when you hear the stats, you can have a better understanding of where they come from and what’s included (and not included) in the figures.

Do you have any questions about unemployment that you’d like to see covered in a future economics article? Email us or leave a comment!

image credit: bgottsab

Faith and Economics

Previous Post

April 25, 2011

Should A Business Tithe?

Next Post

April 27, 2011 Is Gold A Good Investment?

Browse Our Archives

Select a Category ALL Bible and Money Biblical Perspective Book Reviews Budgeting Business Corner Churches and Pastors Debt Encouraging Scriptures Entrepreneurship Faith and Economics Family and Money General Personal Finance Giving Inspirational Quotes Investing Making Money Other Personal Finance Retirement Reviews Round Up Saving Self-Improvement Taxes Uncategorized

Select a Month January 2019 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 November 2016 October 2016 May 2016 March 2016 February 2016 January 2016 January 2015 November 2014 October 2014 August 2014 April 2014 March 2014 January 2014 December 2013 November 2013 October 2013 August 2013 July 2013 June 2013 May 2013 April 2013 March 2013 February 2013 January 2013 December 2012 November 2012 October 2012 September 2012 August 2012 July 2012 June 2012 May 2012 April 2012 March 2012 February 2012 January 2012 December 2011 November 2011 October 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010

TAKE THE

Religious Wisdom Quiz

What king was killed by an arrow in battle, fulfilling Elijah's prophecy?

Select your answer to see how you score.

Ahab Jeroboam Joash Ahaziah