The Jobless Rate.

Essay by elcaboUniversity, Bachelor'sA+, November 2003

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I found the article while reading the business section of last week. It's subtitled "Historically speaking, unemployment could be a lot worse, but it should be an awful lot better." The Author, Mark Gongloff, makes a quick point to inform the reader that the unemployment rate is at its highest level since July 1994 but it's nowhere near the highs it hit in the early 1980's and 1990's. But these are different times and the standards for unemployment is different too, he goes on to say. At 6.1 percent, unemployment is at a nine-year high. 10 years ago a 6 percent unemployment rate was considered to be "full employment" reflecting a growing economy without fueling inflation. This level should be lower today, somewhere around the 5.2 percent mark (this is also stated on pg 143 of the text). The author attributes this change to structural unemployment-development of new technologies in the 90's and the cut of others.

The labor force has also grown to the point where 6.1 percent now represents 9 million unemployed as opposed to 7.9 million 10 years ago. With an older work force more skills and better job retention is also expected. Baby boomers have grown to be middle aged Americans (this is also discussed on pg 143 of the text). There are 4.7 million discouraged workers, people who are able to work but are not actively looking for a job, who, if started looking for a job, would rejoin the labor force and inflate the unemployment rate to 9.1 percent. A 3.5 percent growth per year would be the ideal rate for a year or more to see the levels dip below 5 percent again. This would cause the unemployment rate to rise before falling since the creation of the new jobs would...