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Jobs and unemployment

  • Economics


November 18, 1983 Most analysts believe that the unemploy- ment rate consistent with stable inflation is between 6 and 7 percent. The midpoint of ated to bring the unemployment rate down. This Leiter will explain the composition of the potential work force, look at the magnitudes involved, and suggest when "full employmenf' may be achieved. Explaining the totals The 9.9 million unemployed in October of this year comprised 8.8 percent of the civil- ian labor force. The numbers come from the Department of Labor's monthly survey of a sample of 60,000 households. To be counted among the unemployed, a person must have looked for work in the month preceding the survey, although the form of the search may range from reading a want ad to participating in an actual job interview. A person is also unemployed if he has been temporarily laid off or is waiting to report to a new job within the month. just over half the unemployed in October were between 25 and 54 years old, considered "prime- age" workers by labor market definitions, and about 60 percent of the unemployed were men. To judge whetherthe unemployment in October was high in some sense one must have some benchmark for comparison. One such benchmark is the number of unem- ployed under so-called "full employment conditions." One definition of these condi- tions is when there is no pressure on the inflation rate. This definition takes into account that there will.always be some people unemployed, such as those between jobs. The idea is that unemployment in excess of this minimum, frictional level eases wage and cost pressures and tends to keep the inflation rate down, while tight labor markets cause wage settlements to rise, which are then passed through in the form qf higher price increases. We can expect further large increases in the labor force over the next year and a half although monthly changes are likely to be erratic. Some will come from the growing working-age population who are more will- ing than ever to work, as evidenced by

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