Glossary
Cyclical Unemployment
Unemployment caused by a downturn in the overall economy, such as a recession, leading to reduced demand for goods and services and subsequent layoffs.
Example:
During the 2008 financial crisis, many construction workers experienced cyclical unemployment as housing demand plummeted and building projects halted.
Discouraged workers
Individuals who desire employment but have ceased actively searching for a job due to a belief that no suitable work is available.
Example:
After months of unsuccessful job applications, a recent graduate might become a discouraged worker and stop looking for a job, even though they still want one.
Frictional Unemployment
Temporary unemployment that occurs as individuals transition between jobs or enter the workforce for the first time.
Example:
A software engineer who just quit their old job to find a better-paying position is experiencing frictional unemployment while they search.
Labor Force
The labor force comprises all individuals aged 16 and older who are either employed or actively seeking employment.
Example:
When the economy is booming, more people might decide to join the labor force because job opportunities are plentiful.
Labor Force Participation Rate
This rate indicates the percentage of the total population that is currently in the labor force, showing how much of the potential workforce is engaged in the job market.
Example:
A rising Labor Force Participation Rate can signal a strong economy, as more people feel confident enough to enter or re-enter the job market.
Structural Unemployment
Unemployment resulting from a mismatch between the skills workers possess and the skills demanded by available jobs, often due to technological advancements or industry shifts.
Example:
Coal miners in a region where mines have closed due to a shift to renewable energy might face structural unemployment because their specialized skills are no longer in demand.
Unemployment Rate
The percentage of the labor force that is unemployed, meaning they are actively seeking work but do not have a job.
Example:
If 10 million people are unemployed out of a 100 million person labor force, the unemployment rate would be 10%.