JCM is a three letter acronym that can stand for many things including:
Job Characteristics Model
Job Characteristics Model - (in business and management) A conceptual framework
for designing motivating jobs that create meaningful work experiences that
satisfy employees' growth needs.
Job Characteristics Model - (in business and management) A conceptual
framework for designing motivating jobs that create meaningful work experiences
that satisfy employees' growth needs.
The Job Characteristics model (JCM) proposed by Richard Hackman and Greg
Oldham in 1976 is a very influential model which attempts to address how a core
set of job characteristics impact a number of psychological states, leading to
specific related outcomes in the work environment.
Unemployment is the state in which a person is without work, available to
work, and is currently seeking work. The unemployment rate is used in economic
studies and economic indexes such as the United States' Conference Board's Index
of Leading Indicators. The rate is determined as the percentage of those in the
labor force without jobs.
There are a variety of different types of unemployment, depending on the cause,
and disagreement on which is most severe. Different economic theories suggest
different measures to limit it and on its importance; Monetarism, for example,
thinks that controlling inflation to facilitate growth and investment is more
important, and will lead to increase employment. There is disagreement on how to
measure unemployment. For example, the conservative government, when in power in
the United Kingdom, changed the way in which employment was measured several
times. Each time, the figure reduced (Social Trends). Different countries
experience different levels of unemployment; the USA currently experiences lower
unemployment levels than the European Union, and it also changes over time (e.g.
the Great depression) throughout economic cycles.
Unemployment rate as a percentage of the labor force in the United States
according to the U.S. Bureau of Labor Statistics.
Unemployment rate as a percentage of the labor force in the United States
according to the U.S. Bureau of Labor Statistics.
Types
Types of unemployment and Graduate unemployment
According to economist Edmond Malinvaud, the type of unemployment that occurs
depends on the situation at the goods market, rather than that they belong to
opposing economic theories. If the market for goods is a buyers' market (i.e.:
sales are restricted by demand), Keynesian unemployment may ensue while a
limiting production capacity is more consistent with classical unemployment.
A common typology of unemployment is the following:
Frictional unemployment
Frictional unemployment occurs when a worker moves from one job to another.
While he searches for a job he is experiencing frictional unemployment. This is
a productive part of the economy, increasing both the worker's long term welfare
and economic efficiency.
Classical unemployment
Classical or real-wage unemployment occurs when real wages for a job are set
above the market-clearing level. This is often ascribed to government
intervention, as with the minimum wage, or labour unions. Some, such as Murray
Rothbard, suggest that even social taboos can prevent wages from falling to the
market clearing level.
Structural unemployment
Structural unemployment is caused by a mismatch between jobs offered by
employers and potential workers. This may pertain to geographical location,
skills, and many other factors.
If such a mismatch exists, frictional unemployment is likely to be more
significant as well.
Seasonal unemployment occurs when an occupation is not in demand at certain
seasons.
Keynesian(Seasonal) unemployment
Cyclical or Keynesian unemployment, also known as demand deficient unemployment,
occurs when there is not enough aggregate demand for the labor. This is caused
by a business cycle recession, and wages not falling to meet the equilibrium
rate.
Causes
There is considerable debate among economists as to the causes of unemployment.
Keynesian economics emphasizes unemployment resulting from insufficient
effective demand for goods and service in the economy (cyclical unemployment).
Others point to structural problems, inefficiencies, inherent in labour markets
(structural unemployment). Classical or neoclassical economics tends to reject
these explanations, and focuses more on rigidities imposed on the labor market
from the outside, such as minimum wage laws, taxes, and other regulations that
may discourage the hiring of workers (classical unemployment). Yet others see
unemployment as largely due to voluntary choices by the unemployed (frictional
unemployment).
Though there have been several definitions of voluntary and involuntary
unemployment in the economics literature, a simple distinction is often applied.
Voluntary unemployment is attributed to the individual unemployed workers (and
their decisions), whereas involuntary unemployment exists because of the
socio-economic environment (including the market structure, government
intervention, and the level of aggregate demand) in which individuals operate.
In these terms, much or most of frictional unemployment is voluntary, since it
reflects individual search behavior. On the other hand, cyclical unemployment,
structural unemployment, and classical unemployment, are largely involuntary in
nature. However, the existence of structural unemployment may reflect choices
made by the unemployed in the past, while classical unemployment may result from
the legislative and economic choices made by labor unions and/or political
parties. So in practice, the distinction between voluntary and involuntary
unemployment is hard to draw. The clearest cases of involuntary unemployment are
those where there are fewer job vacancies than unemployed workers even when
wages are allowed to adjust, so that even if all vacancies were to be filled,
there would be unemployed workers. This is the case of cyclical unemployment,
for which macroeconomic forces lead to microeconomic unemployment. See also:
unemployment types
Some argue one of the main causes of unemployment in a free market economy is
that the law of supply and demand is not really applied to the price to be paid
for employing people. In situations of falling demand for products and services
the wages of all employees, from president to errand boy, are not automatically
reduced by the required percentage to make the business viable. Others say that
it is the market that determines the wages based on the desirability of the job.
The more people qualified and interested in the job, the lower the wages for
that job become. Based on this view, the profitability of the company is not a
factor in determining whether or not the work is profitable to the employee.
People are laid off, because pay reductions would reduce the number of people
willing to work a job. With fewer people interested in a particular job, the
employees bargaining power would actually rise to stabilize the situation, but
their employer would be unable to fulfill their wage expectations. In the
classical framework, such unemployment is due to the existing legal framework,
along with interferences with the market by non-market institutions such as
labor unions and government.
In developing countries unemployment is often caused by burdensome government
regulation. The World Bank's Doing Business project shows how excessive labor
regulation increases unemployment among women and youths in Africa, the Middle
East and Latin America.
Open unemployment is generally associated with capitalist economies. In this
view, unemployment is not an aberration of capitalism, indicating any sort of
systemic malfunction. Rather, unemployment is a necessary structural feature of
capitalism, intended to discipline the workforce. If unemployment is too low,
workers make wage demands that either cuts into profits to an extent that
jeopardize future investment, or are passed on to consumers, thus generating
inflationary instability. David Schweickart suggests, "Capitalism cannot be a
full-employment economy, except in the very short term. For unemployment is the
"invisible hand" -- carrying a stick -- that keeps the workforce in line." .
Classical economists dispute this, arguing that when there is too high a supply
of labour, providing unions and Government have no prevented wage changes, the
wage rate should fall, returning the economy to its long run efficient position
at full employment.
Unemployment increases the more the government intervenes into the economy to
try to improve the rights of those with jobs. For example, minimum wages raise
the cost of labour to above the market equilibrium, resulting in people who wish
to work at the going rate but cannot as the wages are higher than their worth to
business; unemployment. Laws restricting layoffs make businesses less likely to
hire in the first place leaving many young people unemployed and unable to find
work.
The results of both actions lead to less productivity and are claimed to incur a
higher cost on society as a whole. The results lead to not just higher
unemployment but may increase poverty. This is why the less market oriented
countries of Europe often sustain substantially high unemployment rates in
comparison to the United States; that is, government induced employment through
policies designed to protect the worker. The welfare state then responds with
various benefits that are paid for by the middle and upper class which reduces
their ability to consume and reduces the incentive to work hard and innovate for
all sections of society, as the poor have income without working and the rich
see their reward for work reduced. Economists like Ludwig Von Mises, Milton
Friedman, Friedrich Von Hayek not only believe that the welfare of society
decreases with this kind of intervention but that these economic policies are
not sustainable.
One of the explanations behind (structural unemployment) and a warning that this
kind of unemployment could be permanent in modern society, came from Economist
and Philosopher André Gorz.The micro chip revolution and the explosion in
computer science and robotising of work even in less developt industrialized
countries is the main reason.
He there fore argues that the idea of `working less so everyone can work and
that an basic income for all must be the solution,and he explains: "The
connection between more and better has been broken; our needs for many products
and services are already more than adequately met, and many of our as-yet-
unsatisfied needs will be met not by producing more, but by producing
differently, producing other things, or even producing less. This is especially
true as regards our needs for air, water, space, silence, beauty, time and human
contact...
"From the point where it takes only 1,000 hours per year or 20,000 to 30,000
hours per lifetime to create an amount of wealth equal to or greater than the
amount we create at the present time in 1,600 hours per year or 40,000 to 50,000
hours in a working life, we must all be able to obtain a real income equal to or
higher than our current salaries in exchange for a greatly reduced quantity of
work...
"Neither is it true any longer that the more each individual works, the better
off everyone will be. The present crisis has stimulated technological change of
an unprecedented scale and speed: `the micro chip revolution'. The object and
indeed the effect of this revolution has been to make rapidly increasing savings
in labour, in the industrial, administrative and service sectors. Increasing
production is secured in these sectors by decreasing amounts of labour. As a
result, the social process of production no longer needs everyone to work in it
on a full-time basis. The work ethic ceases to be viable in such a situation and
workbased society is thrown into crisis" André Gorz, Critique of Economic
Reason,Gallié,1989
Okun's Law
Okun's law states that for every 2% GDP falls relative to potential GDP,
unemployment rises 1% (of the total workforce). When the economy operates at
productive capacity, it will experience the Natural rate of unemployment.
Solutions
At an individual level, the solution to unemployment may be as simple as getting
a job, or getting more training.
Societies try a number of different measures to get as many people as possible
into work. However, attempts to reduce the level of unemployment beyond the
Natural rate of unemployment generally fail, resulting only in less output and
more inflation.
Phillips Curve
It used to be largely believed that unemployment could be solved using the
Phillips curve. This involves increasing inflation to reduce unemployment by
fooling workers into accepting jobs at a lower rate than they would otherwise
have done, due to the declining value of money. However, since the work of
Milton Friedman, it is widely accepted that the Phillips curve is vertical in
the long run: you cannot achieve a lowering of the unemployment rate in the long
run, and attempts to do so will only cause inflation.
Demand side
Normal markets reach equilibrium, where supply equals demand; everyone who wants
to sell at the market price can. Those who do not want to sell at this price do
not; in the labour market this is classical unemployment. Increases in the
demand for labour will move the economy along the supply curve, increasing wages
and employment. The demand for labour in an economy is derived from the demand
for goods and services. As such, if the demand for goods and services in the
economy increases, the demand for labour will increase, increasing employment
and wages.
Monetary policy and fiscal policy can both be used to increase short-term growth
in the economy, increasing the demand for labour and decreasing unemployment.
Supply side
However, the labour market is not efficient: it doesn't clear. Minimum wages and
union activity keep wages from falling, which means too many people want to sell
their labour at the going price but cannot. Supply-side policies can solve this
by making the labour market more flexible. These include removing the minimum
wage and reducing the power of unions, which act as a labour cartel. Other
supply side policies include education to make workers more attractive to
employers.
Supply side reforms also increase long-term growth. This increased supply of
goods and services requires more workers, increasing employment. It is argued
that supply side policies, which include cutting taxes on businesses and
reducing regulation, create jobs and reduce unemployment.
Tax-related
One structural solution to unemployment proposed was a graduated retail tax, or
"jobs levy", to firms where labor is more expensive than capital. This method
will shift tax burden to capital intensive firms and away from labor intensive
firms. In theory this will make firms shift operations to a more politically
desired balance between labor intensive and capital intensive production. The
excess tax revenue from the jobs levy would finance labor intensive public
projects. However, by raising the value of labour artificially above capital,
this would discourage capital investment, the source of economic growth. With
less growth, long-run employment would fall.
Costs of unemployment
Individual
An 1837 political cartoon about unemployment in the United States.
An 1837 political cartoon about unemployment in the United States.
Unemployed individuals are unable to earn money to meet financial obligations.
Failure to pay mortgage payments or to pay rent may lead to homelessness through
foreclosure or eviction. Unemployment increases susceptibility to malnutrition,
illness, mental stress, and loss of self-esteem, leading to depression.
Dr. M. Harvey Brenner conducted a study in 1979 on the "Influence of the Social
Environment on Psychology." Brenner found that for every 10% increase in the
number of unemployed there is a 1.2% in total mortality, a 1.7% increase in
cardiovascular disease, 1.3% more cirrhosis cases, 1.7% more suicides, 0.4% more
arrests, and 0.8% more assaults reported to the police. A more recent study by
Christopher Ruhm on the effect of recessions on health found that several
measures of health actually improve during recessions. As for the impact of an
economic downturn on crime, during the Great Depression the crime rate did not
decrease. Because unemployment insurance in the U.S. typically does not replace
50% of the income one received on the job (and one cannot receive it forever),
the unemployed often end up tapping welfare programs such as Food Stamps or
accumulating debt. Higher government transfer payments in the form of welfare
and food stamps decrease spending on productive economic goods, decreasing GDP.
Some hold that many of the low-income jobs are not really a better option than
unemployment with a welfare state (with its unemployment insurance benefits).
But since it is difficult or impossible to get unemployment insurance benefits
without having worked in the past, these jobs and unemployment are more
complementary than they are substitutes. (These jobs are often held short-term,
either by students or by those trying to gain experience; turnover in most
low-paying jobs is high) Unemployment insurance keeps an available supply of
workers for the low-paying jobs, while the employers' choice of management
techniques (low wages and benefits, few chances for advancement) is made with
the existence of unemployment insurance in mind. This combination promotes the
existence of one kind of unemployment, frictional unemployment.
Another cost for the unemployed is that the combination of unemployment, lack of
financial resources, and social responsibilities may push unemployed workers to
take jobs that do not fit their skills or allow them to use their talents.
Unemployment can cause underemployment.
The fear of job loss can spur psychological anxiety.
Society
An economy with high unemployment is not using all of the resources, i.e.
labour, available to it. Since it is operating below its production possibility
frontier, it could have higher output if all the workforce were usefully
employed. However, there is a trade off between economic efficiency and
unemployment: if the frictionally unemployed accepted the first job they were
offered, they would be likely to be operating at below their skill level,
reducing the economy's efficiency.
It is estimated that, during the Great Depression, unemployment due to sticky
wages cost the US economy about $4,000 billion. This is many times larger than
losses due to monopolies, cartels and tariffs.
During a long period of unemployment, workers can lose their skills, causing a
loss of human capital. Being unemployed can also reduce the life expectancy of
workers by about 7 years
High unemployment can encourage xenophobia and protectionism as workers fear
that foreigners are stealing their jobs. Efforts to preserve existing jobs of
domestic and native workers include legal barriers against "outsiders" who want
jobs, obstacles to immigration, and/or tariffs and similar trade barriers
against foreign competitors.
Finally, a rising unemployment rate concentrates the oligopsony power of
employers by increasing competition amongst workers for scarce employment
opportunities. .
Historical unemployment
This section is suspect and may represent a minority view.
Preliterate communities treat their members as parts of an extended family and
thus do not allow unemployment. In precapitalist societies such as European
feudalism, the serfs were never "unemployed" because they had direct access to
the land, and the needed tools, and could thus work to produce crops. Just as on
the American frontier during the nineteenth century, there were day laborers and
subsistence farmers on poor land, whose position in society was somewhat
analogous to the unemployed of today. But they were not truly unemployed, since
they could find work and support themselves on the land.
Under both ancient and modern systems of slave-labor, slave-owners never let
their property be unemployed for long. (If anything, they would sell the
unneeded laborer.) Planned economies such as the old Soviet Union or today's
Cuba typically provide occupation for everyone, using substantial overstaffing
if necessary. (This is called "hidden unemployment," which is sometimes seen as
a kind of underemployment, definition 3.) Workers' cooperatives—such as those
producing plywood in the U.S. Pacific Northwest—do not let their members become
unemployed unless the co-op itself goes bankrupt. Artificially increasing
employment in this way however means employing workers beyond their worth: the
workers are making a loss, and are from society's point of view not usefully
employed.
Measurement
Though many people care about the number of unemployed, economists typically
focus on the unemployment rate. This corrects for the normal increase in the
number of people employed due to increases in population and increases in the
labor force relative to the population. The unemployment rate is expressed as a
percentage, and is calculated as follows: Unemployment\ Rate=\frac{Unemployed\
Workers}{Total\ Labor\ Force}*100%
As defined by the International Labour Organization, "unemployed workers" are
those who are currently not working but are willing and able to work for pay,
currently available to work, and have actively searched for work.
Since not all unemployment may be "open" and counted by government agencies,
official statistics on unemployment may not be accurate.
The ILO describes 4 different methods to calculate the unemployment rate:
* Labour Force Sample Surveys are the most preferred method of unemployment rate
calculation since they give the most comprehensive results and enables
calculation of unemployment by different group categories such as race and
gender. This method is the most internationally comparable.
* Official Estimates are determined by a combination of information from one or
more of the other three methods. The use of this method has been declining in
favor of Labour Surveys.
* Social Insurance Statistics such as unemployment benefits, are computed base
on the number of persons insured representing the total labour force and the
number of persons who are insured that are collecting benefits. This method has
been heavily criticized due to the expiration of benefits before the person
finds work.
* Employment Office Statistics are the least effective being that they only
include a monthly tally of unemployed persons who enter employment offices. This
method also includes unemployed who are not unemployed per the ILO definition.
European Union (Eurostat)
Eurostat, the statistical office of the European Union, defines unemployed as
those persons age 15 to 74 who are not working, have looked for work in the last
four weeks, and ready to start work within two weeks, which conform to ILO
standards. Both the actual count and rate of employment are reported.
Statistical data is available by member state, EU12, EU15, EU25, EU27, EA11, and
EA13. Eurostat also includes a long-term unemployment rate. This is defined as
part of the unemployed who have been unemployed for an excess of 1 year.
Three methods of data collection are used in the European Union. The European
Union Labour Force Survey (EU-LFS) collects data on all member states each
quarter. For monthly calculations, national surveys or national registers from
employment offices are used in conjunction with quarterly EU-LFS data. Monthly
unemployment rates are interpolated from monthly data from member states to
provide "harmonized data."
At this time Germany's unemployment data is collected separately from the
(EU-LFS).
United States Bureau of Labor Statistics
There was an official measure of 7.6 million unemployed in the U.S. as of
January 2008, a rate of 4.9%.
Unemployment rate for US states in 2004
Unemployment rate for US states in 2004
The Bureau of Labor Statistics measures employment and unemployment (of those
over 15 years of age) using two different labor force surveys conducted by the
United States Census Bureau (within the United States Department of Commerce)
and/or the Bureau of Labor Statistics (within the United States Department of
Labor) that gather employment statistics monthly. The Current Population Survey
(CPS), or "Household Survey", conducts a survey based on a sample of 60,000
households. This Survey measures the unemployment rate based on the ILO
definition. The data is also used to calculate 5 other unemployment rates as a
percentage of the labor force based on different definitions noted as U1 through
U6:
* U1: Percentage of labor force unemployed 15 weeks or longer.
* U2: Percentage of labor force who lost jobs or completed temporary work.
* U3: Official unemployment rate per ILO definition.
* U4: U3 + "discouraged workers", or those who have stopped looking for work
because current economic conditions makes them believe that no work is available
for them.
* U5: U4 + other "marginally attached workers", or those who "would like" and
are able to work, but have not looked for work recently.
* U6: U5 + Part time workers who want to work full time, but can not due to
economic reasons.
Note: "Marginally attached workers" are added to the total labor force for
unemployment rate calculation for U4, U5, and U6.
The Current Employment Statistics survey (CES), or "Payroll Survey", conducts a
survey based on a sample of 160,000 businesses and government agencies that
represent 400,000 individual employers. This survey measures only
nonagricultural, nonsupervisory employment; thus, it does not calculate an
unemployment rate, and it differs from the ILO unemployment rate definition.
These two sources have different classification criteria, and usually produce
differing results. Additional data is also available from the government, such
as the unemployment insurance weekly claims report available from the Office of
Workforce Security, within the U.S. Department of Labor Employment & Training
Administration.
These statistics are for the U.S. economy as a whole, hiding variations among
groups. For January 2008 in the U.S. the unemployment rates were 4.4% for adult
men, 4.2% for adult women, 4.4% for Caucasians, 6.3% for Hispanics or Latinos
(all races), 9.2% for African Americans, 3.2% for Asian Americans, and 18.0% for
teenagers.
These percentages represent the usual rough ranking of these different groups'
unemployment rates. The absolute numbers change over time and with the business
cycle. The Bureau of Labor Statistics provides up-to-date numbers via a pdf
linked here.here The BLS also provides a readable concise current Employment
Situation Summary, updated monthly.
Limitations of the unemployment definition
The unemployment rate may be different from the impact of the economy on people.
The unemployment figures indicate how many are not working for pay but seeking
employment for pay. It is only indirectly connected with the number of people
who are actually not working at all or working without pay. Therefore, critics
believe that current methods of measuring unemployment are inaccurate in terms
of the impact of unemployment on people as these methods do not take into
account the 1.5% of the available working population incarcerated in U.S.
prisons (who may or may not be working while incarcerated), those who have lost
their jobs and have become discouraged over time from actively looking for work,
those who are self-employed or wish to become self-employed, such as tradesmen
or building contractors or IT consultants, those who have retired before the
official retirement age but would still like to work (involuntary early
retirees), those on disability pensions who, while not possessing full health,
still wish to work in occupations suitable for their medical conditions, those
who work for payment for as little as one hour per week but would like to work
full-time. These people are "involuntary part-time" workers, those who are
underemployed, e.g., a computer programmer who is working in a retail store
until he can find a permanent job, involuntary stay-at-home mothers who would
prefer to work, and graduate and Professional school students who were unable to
find worthwhile jobs after they graduated with their Bachelor's degrees.
On the other hand, the measures of employment and unemployment may be "too
high". In some countries, the availability of unemployment benefits can inflate
statistics since they give an incentive to register as unemployed. People who do
not really seek work may choose to declare themselves unemployed so as to get
benefits; people with undeclared paid occupations may try to get unemployment
benefits in addition to the money they earn from their work. Conversely, the
absence of any tangible benefit for registering as unemployed discourages people
from registering.
However, in countries such as the United States, Canada, Mexico, Australia,
Japan and the European Union, unemployment is measured using a sample survey
(akin to a Gallup poll). According to the BLS, a number of Eastern European
nations have instituted labor force surveys as well. The sample survey has its
own problems because the total number of workers in the economy is calculated
based on a sample rather than a census.
It is possible to be neither employed nor unemployed by ILO definitions, i.e.,
to be outside of the "labor force." These are people who have no job and are not
looking for one. Many of these are going to school or are retired. Family
responsibilities keep others out of the labor force. Still others have a
physical or mental disability which prevents them from participating in labor
force activities.
Typically, employment and the labor force include only work done for monetary
gain. Hence, a homemaker is neither part of the labor force nor unemployed. Nor
are full-time students nor prisoners considered to be part of the labor force or
unemployment. The latter can be important. In 1999, economists Lawrence F. Katz
and Alan B. Krueger estimated that increased incarceration lowered measured
unemployment in the United States by 0.17% between 1985 and the late 1990s. In
particular, as of 2005, roughly 0.7% of the US population is incarcerated (1.5%
of the available working population).
Children, the elderly, and some individuals with disabilities are typically not
counted as part of the labor force in and are correspondingly not included in
the unemployment statistics. However, some elderly and many disabled individuals
are active in the labor market.
In the early stages of an economic boom, unemployment often rises. This is
because people join the labor market (give up studying, start a job hunt, etc.)
because of the improving job market, but until they have actually found a
position they are counted as unemployed. Similarly, during a recession, the
increase in the unemployment rate is moderated by people leaving the labor force
or being otherwise discounted from the labor force, such as with the
self-employed.
Due to these deficiencies, many labor market economists prefer to look at a
range of economic statistics such as labor market participation rate, the
percentage of people aged between 15 and 64 who are currently employed or
searching for employment, the total number of full-time jobs in an economy, the
number of people seeking work as a raw number and not a percentage, and the
total number of person-hours worked in a month compared to the total number of
person-hours people would like to work.
Aiding the unemployed
The most developed countries have aids for the unemployed as part of the welfare
state. These unemployment benefits include unemployment insurance, welfare,
unemployment compensation and subsidies to aid in retraining. The main goal of
these programs is to alleviate short-term hardships and, more importantly, to
allow workers more time to search for a good job.
In the U.S. the unemployment insurance allowance one receives is based solely on
previous income (not time worked, family size, etc.) and usually compensates for
one-third of one's previous income. To qualify, one must reside in their
respective state for at least a year and, of course, work. The system was
established by the Social Security Act of 1935. While 90% of citizens are
covered on paper, only 40% could actually receive benefits. In cases of highly
seasonal industries the system provides income to workers during the off
seasons, thus encouraging them to stay attached to the industry.
In the United States the New Deal made unemployment relief a top governmental
priority. The goal of the Works Progress Administration (WPA) was to employ most
of the unemployed people on relief until the economy recovered. FERA/WPA
director Harry Hopkins testified to Congress in January 1935 why he set the
number at 3.5 million, using FERA data. At $1200 per worker per year he asked
for and received $4 billion.
"On January 1 there were 20 million persons on relief in the United States. Of
these, 8.3 million were children under sixteen years of age; 3.8 million were
persons who, though between the ages of sixteen and sixty-five were not working
nor seeking work. These included housewives, students in school, and
incapacitated persons. Another 750,000 were persons sixty-five years of age or
over. Thus, of the total of 20 million persons then receiving relief, 12.85
million were not considered eligible for employment. This left a total of 7.15
million presumably employable persons between the ages of sixteen and sixty-five
inclusive. Of these, however, 1.65 million were said to be farm operators or
persons who had some non-relief employment, while another 350,000 were, despite
the fact that they were already employed or seeking work, considered
incapacitated. Deducting this two million from the total of 7.15 million, there
remained 5.15 million persons sixteen to sixty-five years of age, unemployed,
looking for work, and able to work. Because of the assumption that only one
worker per family would be permitted to work under the proposed program, this
total of 5.15 million was further reduced by 1.6 million--the estimated number
of workers who were members of families which included two or more employable
persons. Thus, there remained a net total of 3.55 million workers in as many
households for whom jobs were to be provided." [Howard p 562, paraphrasing
Hopkins]
The WPA did not quite reach 3.5 million--its maximum was 3.3 million in November
1938. Worker pay was based on three factors: the region of the country, the
degree of urbanization and the individual's skill. It varied from $19/month to
$94/month. The goal was to pay the local prevailing wage, but to limit a person
to 30 hours or less a week of work. About 75% of WPA employment and 75% of WPA
expenditures went to public infrastructure, such as highways, airports, parks
and libraries.
The WPA had numerous critics who said that political considerations helped
decide which states received the most funding. Civil rights leaders often
complained that African Americans were proportionally underrepresented. In New
Jersey, they argued, "In spite of the fact that Negroes indubitably constitute
more than 20% of the State's unemployed, they composed 15.9% of those assigned
to W.P.A. jobs during 1937." [Howard 287] Nationwide in late 1937, 15.2% were
African American. The NAACP magazine Opportunity hailed the WPA: [February,
1939, p. 34. in Howard 295]
It is to the eternal credit of the administrative officers of the WPA that
discrimination on various projects because of race has been kept to a minimum
and that in almost every community Negroes have been given a chance to
participate in the work program. In the South, as might have been expected, this
participation has been limited, and differential wages on the basis of race have
been more or less effectively established; but in the northern communities,
particularly in the urban centers, the Negro has been afforded his first real
opportunity for employment in white-collar occupations
Congress shut down the WPA in late 1943 as World War II created thousands of
jobs in the military.
Families on relief 1935–41
Relief cases 1936-1941
Monthly average in 1,000 Year 1936 1937 1938 1939 1940 1941
Workers employed
WPA 1,995 2,227 1,932 2,911 1,971 1,638
CCC and NYA 712 801 643 793 877 919
Other federal work projects 554 663 452 488 468 681
Public assistance cases
Social security programs 602 1,306 1,852 2,132 2,308 2,517
General relief 2,946 1,484 1,611 1,647 1,570 1,206
Total families helped 5,886 5,660 5,474 6,751 5,860 5,167
Unemployed workers (Bur Lab Stat) 9,030 7,700 10,390 9,480 8,120 5,560
Coverage (cases/unemployed) 65% 74% 53% 71% 72% 93%
source: Donald S. Howard, WPA and Federal Relief Policy. 1943 p 34.
Year Unemployment (% labor force)
1933 24.9
1934 21.7
1935 20.1
1936 16.9
1937 14.3
1938 19.0
1939 17.2
1940 14.6
1941 9.9
1942 4.7
1943 1.9
1944 1.2
1945 1.9
source: Historical Statistics US (1976) series D-86
See also welfare and training.
Involuntary unemployment
Say's law declares that, in time, "markets clear" in an unfettered, unregulated
laissez-faire economy: every seller will find a buyer at some strike price, and
every buyer will find a seller at some strike price. Sellers and buyers may
refuse the strike price but this personal decision is voluntary, which causes
the selling or buying to leave the economic model. This theory relies heavily on
the absence of government regulation and assumes a developed economy without
sabotage where labor strikes, as opposed to strike (mutually agreed upon)
prices, are illegal.
Keynes tried to demonstrate in The General Theory of Employment, Interest and
Money that Say's law did not work in the real world of the 1930s Depression
because of oversaving and private investor timidity, and that in consequence
people could be thrown out of work involuntarily without being able to find
acceptable new jobs.
This conflict of the neoclassical and Keynesian theories has had strong
influence on government policy. The tendency for government is to curtail and
eliminate unemployment through increases in benefits and government jobs, and to
encourage the job-seeker to both consider new careers and relocation to another
city. This tends to broaden the "market" to a national level far beyond that
which most people are comfortable.
Involuntary unemployment does not exist in agrarian societies nor is it formally
recognized to exist in underdeveloped but urban societies such as the
mega-cities of Africa and of India/Pakistan, given that, in such societies, the
suddenly unemployed person must meet his survival needs, by getting a new job
quickly at any strike price, entrepreneurship, or joining the invisible economy
of the hustler.
From the narrative standpoint, involuntary unemployment is discussed in the
stories by Ehrenreich, the narrative sociology of Bourdieu, and novels of social
suffering such as John Steinbeck's Of Mice and Men.
Benefits
M Full employment
Unemployment may have advantages as well as disadvantages for the overall
economy. Notably, it may help avert runaway inflation, which negatively affects
almost everyone in the affected economy and has serious long-term economic
costs. However the historic assumption that full local employment must lead
directly to local inflation has been attenuated, as recently expanded
international trade has shown itself able to continue to supply low-priced goods
even as local employment rates rise closer to full employment.
The inflation-fighting benefits to the entire economy arising from a presumed
optimum level of unemployment has been studied extensively. Before current
levels of world trade were developed, unemployment was demonstrated to reduce
inflation, following the Phillips curve, or to decelerate inflation, following
the NAIRU/natural rate of unemployment theory.
Beyond the benefits of controlled inflation, frictional unemployment provides
employers a larger applicant pool from which to select employees better suited
to the available jobs. The unemployment needed for this purpose may be very
small, however, since it is relatively easy to seek a new job without losing
one's current one. And when more jobs are available for fewer workers (lower
unemployment), it may allow workers to find the jobs that better fit their
tastes, talents, and needs.
As in the Marxian theory of unemployment, special interests may also benefit:
some employers may expect that employees with no fear of losing their jobs will
not work as hard, or will demand increased wages and benefit. According to this
theory, unemployment may promote general labor productivity and profitability by
increasing employers' monopsony-like power (and profits).
Optimal unemployment has also been defended as an environmental tool to brake
the constantly accelerated growth of the GDP to maintain levels sustainable in
the context of resource constraints and environmental impacts. However the tool
of denying jobs to willing workers seems a blunt instrument for conserving
resources and the environment -- it reduces the consumption of the unemployed
across the board, and only in the short-term. Full employment of the unemployed
workforce, all focused toward the goal of developing more environmentally
efficient methods for production and consumption might provide a more
significant and lasting cumulative environmental benefit and reduced resource
consumption. If so the future economy and workforce would benefit from the
resultant structural increases in the sustainable level of GDP growth.
Some critics of the "culture of work" such as anarchist Bob Black see employment
as overemphasized culturally in modern countries. Such critics often propose
quitting jobs when possible, working less, reassessing the cost of living to
this end, creation of jobs which are "fun" as opposed to "work," and creating
cultural norms where work is seen as unhealthy. These people advocate an
"anti-work" ethic for life.
In economics, search theory (or just search) is the study of an individual's
optimal strategy when choosing from a series of potential opportunities of
random quality, given that delaying choice is costly. Search models illustrate
how best to balance the cost of delay against the value of the option to try
again.
The two most common settings for these models (and their empirical applications)
are a worker's search for a job, in labor economics, and a consumer's search for
a product they wish to purchase, in consumer theory. From a worker's
perspective, an acceptable job would be one that pays a high wage, one that
offers desirable benefits, and/or one that offers pleasant and safe working
conditions. From a consumer's perspective, a product worth purchasing would have
sufficiently high quality, and be offered at a sufficiently low price. In both
cases, whether a given job or product is acceptable depends on the searcher's
beliefs about the alternatives available in the market.
Search from a known distribution
George J. Stigler proposed thinking of searching for bargains or jobs as an
economically important problem, but the problem was first solved mathematically
by John J. McCall. McCall's paper studied the problem of which job offers an
unemployed worker should accept, and which reject, when the distribution of
alternatives is known and constant, and the value of money is constant. Holding
fixed job characteristics, he characterized the job search decision in terms of
the reservation wage, that is, the lowest wage the worker is willing to accept.
The worker's optimal strategy is simply to reject any wage offer lower than the
reservation wage, and accept any wage offer higher than the reservation wage.
The reservation wage may change over time if some of the conditions assumed by
McCall are not met. For example, a worker who fails to find a job might lose
skills or face stigma, in which case the distribution of potential offers that
worker might receive will get worse, the longer he or she is unemployed. In this
case, the worker's optimal reservation wage will decline over time. Likewise, if
the worker is risk averse, the reservation wage will decline over time if the
worker gradually runs out of money while searching. The reservation wage would
also differ for two jobs of different characteristics; that is, there will be a
compensating differential between different types of jobs.
An interesting observation about McCall's model is that greater variance of
offers may make the searcher better off, and prolong optimal search, even if he
or she is risk averse. This is because when there is more variation in wage
offers (holding fixed the mean), the searcher may want to wait longer (that is,
set a higher reservation wage) in hopes of receiving an exceptionally high wage
offer. The possibility of receiving some exceptionally low offers has less
impact on the reservation wage, since bad offers can be turned down.
While McCall framed his theory in terms of the wage search decision of an
unemployed worker, similar insights are applicable to a consumer's search for a
low price. In that context, the highest price a consumer is willing to pay for a
particular good is called the reservation price.
Search from an unknown distribution
When the searcher does not even know the distribution of offers, then there is
an additional motive for search: by searching longer, more is learned about the
range of offers available. Search from one or more unknown distributions is
called a multi-armed bandit problem. The name comes from the slang term
'one-armed bandit' for a casino slot machine, and refers to the case in which
the only way to learn about the distribution of rewards from a given slot
machine is by actually playing that machine.
Endogenizing the price distribution
Studying optimal search from a given distribution of prices led economists to
ask why the same good should ever be sold, in equilibrium, at more than one
price. After all, this is by definition a violation of the law of one price.
However, when buyers do not have perfect information about where to find the
lowest price (that is, whenever search is necessary), not all sellers may wish
to offer the same price, because there is a tradeoff between the frequency and
the profitability of their sales. That is, firms may be indifferent between
posting a high price (thus selling infrequently, only to those consumers with
the highest reservation prices) and a low price (at which they will sell more
often, because it will fall below the reservation price of more consumers). ,
Matching theory
More recently, especially since the 1990s, many economists have been working on
integrating job search into models of the macroeconomy, using a framework called
'matching theory' originally developed by Dale Mortensen and extended by Peter
A. Diamond and Christopher A. Pissarides. In this framework, the rate at which
new jobs are formed is assumed to depend both on workers' search decisions, and
on firms' decisions to open job vacancies. While some matching models include a
distribution of different wages, others are simplified by ignoring wage
differences. The simplified versions of the model focus instead on the main
reduced form implication of search: namely, the fact that optimal job search
takes time, so that workers are likely to pass through a spell of unemployment
before beginning work
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John Mellencamp, also known as John Cougar and John Cougar Mellencamp, (born
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life
Journal of Clinical Microbiology
Journal of Chinese Medicine
AGM-169 Joint Common Missile
Joint Cruise Missile
Japan Collection of Microorganisms
Joint Conflict Model
Japan Cash Machine, maker of Bill validators
Jim Charles Marshall, founder of the Marshall company, an iconic manufacturer of
guitar amplifiers.
Jewish Children's Museum
JCM is also an up and coming band out of East Lansing, MI featuring a mix of
rock, funk and jazz.
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