People who are jobless and have not looked for work within the past four weeks are removed from the labor force by BLS and are no longer counted as unemployed. Most people leave the labor force when they retire, go to school, have a disability that keeps them from working, or have family responsibilities. Others may feel they can't get work, and so stop looking. These are called discouraged workers by the BLS. They are removed from the unemployment statistics and labor force, but are also report upon separately in the Employment Report.
Unemployment is an important statistic used by the government to gauge the health of the economy. If unemployment gets too high, the government will try to stimulate the economy and create jobs with expansionary monetary or fiscal policy. It will also create additional benefits to aid the unemployed until they can find jobs.
The BLS measures unemployment through monthly household surveys, called the Current Population Survey (CPS). It has been conducted every month since 1940, as part of the government's response to the Great Depression. It has been modified several times since then, and experienced a major redesign in 1994. This included a revamping of the questionnaire, the use of computer-assisted interviewing, and revisions to some of the labor force concepts.
National unemployment is caused when the economy slows down, and businesses are forced to cut costs by reducing payroll costs. Unemployment can also be caused by competition in specific industries or companies. Unemployment can also be caused by poor job performance.
The consequences of unemployment for the economy are less consumer spending, as workers have less money to spend until they find another job. If high national unemployment continues, it can cause a recession or even a depression. That's because less consumer spending from unemployed workers reduces business revenue, which forces them to cut more payroll to reduce their costs.
Employment FAQ
- How Is Employment Defined?
- How Is Unemployment Defined?
- What Is Being Done to Control Unemployment?
- What Can I Do to Protect Myself From Unemployment?
