unemployedNote: This is the latest entry in the Acton blog series, “What Christians Should Know About Economics.” For other entries in the series see this post.

 The Term: Unemployment

What it Means: If you consult a dictionary, you’ll find a number of commonsensical definitions for unemployment: the state of being without a job; being without a paid job but available to work, etc. But like many other economic terms, the dictionary definition can vary significantly from how the term is often used. For example, since your teenage daughter, your neighbor’s stay-at-home spouse, or your retired grandfather are without a job, are they considered “unemployed”? In each case the answer is the same: It depends.

According to the federal government, to be unemployed a person must (a) be jobless, (b) looking for a job, and (c) available for work.

People are considered employed if they have a job (whether temporary, part-time, etc.). People who are neither employed nor unemployed are considered to be not in the labor force.

In America, the labor force consists of all persons 16 years old and over who are not serving on active duty in the military and are not confined to institutions such as nursing homes and prisons and either have a job or are looking for work. The labor force is made up of both the employed and the unemployed.

So unemployment refers to anyone who doesn’t have a job, wants one and is available to work, and is actively looking for work. That last part is particularly important because “discouraged workers” are not counted as unemployed. (See below for more on discouraged workers.)

Why it Matters: The Genesis account of creation tells us that from the beginning, humanity was created to work. God puts Adam in the garden to “work and watch over it.” As Rev. Sirico has said, “The Scripture provides an insight into our nature: We are all, man and woman, called into this life to find our vocation, the work that is uniquely ours and contributes to the flourishing of the wider community.”

Because jobs can serve the needs of our neighbors and lead to human flourishing both for the individual and communities, they are the most important part of a morally functioning economy. For most of us, the work we do at our jobs is the primary way we serve our neighbor. It is also a way that we glorify God. As Gene Veith says,

When we pray the Lord’s Prayer, we ask God to give us this day our daily bread. And he does. The way he gives us our daily bread is through the vocations of farmers, millers, and bakers. We might add truck drivers, factory workers, bankers, warehouse attendants, and the lady at the checkout counter. Virtually every step of our whole economic system contributes to that piece of toast you had for breakfast. And when you thanked God for the food that he provided, you were right to do so.

Jobs are important to the flourishing of the individual, the community, and the economy—which is why unemployment should be a primary concern for Christians. Unemployment can have negative effects on communities, families, and a person’s subjective well-being and self-esteem. Helping people to find work that is uniquely their own and contributes to the flourishing of the wider community should be one of the chief economic concerns for the Christian community.

Related economic indicators: Each month the Bureau of Labor Statistics issues the Employment Situation Summary, which is often referred to as the “Jobs Report.” The most widely reported number in the jobs report is the unemployment rate.

Taken alone, the unemployment rate can be a misleading statistic since it does not include discouraged workers. The unemployment rate can drop if people are discouraged from looking for a job and have not looked for employment in the last month. A more significant statistic in the report is whether the nonfarm payroll employment rose or fell and by how much. The economy needs to add about 180,000 new jobs just to keep up with population growth. If the number is higher than that, then employment is probably on track; if the number is lower, then the economy is probably in trouble.

Other Stuff You Might Want to Know:

• There are a variety of different types of unemployment, including structural unemployment (jobs may be in Chicago, but he workers who would take them are in Iowa), frictional unemployment (workers are between jobs, such as when recent college graduates search for employment), voluntary unemployment (workers choose not to take a job at the going wage rate, and seasonal unemployment (e.g., workers at a ski resort being laid off during the summer time) .

• Under-employment is a related concept that refers to people who have a job that is part time or temporary, but they would like to work full-time,

• Because of frictional and voluntary unemployment, many economists believe there is a natural rate of unemployment in an healthy economy (in American, the natural rate is around 4 percent).

• Since 1948, the lowest the unemployment rate has been in the U.S. is 2.5 percent. That was in May and June 1953 when the economy overheated due to the Korean War. The highest rate for a single month is shared by November and December of 1982 with an unemployment rate of 10.8 percent

• Receiving benefits from the Unemployment Insurance program has no bearing on whether a person is classified as unemployed. (Household income also has no bearing on unemployment insurance. In 2009, 2,362 millionaires got unemployment checks.)

• The government considers people to be “marginally attached to the labor force” if they currently want a job, have looked for work in the last 12 months, and are available for work. “Discouraged workers” are a subset of the marginally attached. Discouraged workers report they are not currently looking for work for one of four reasons:

1. They believe no job is available to them in their line of work or area.
2. They had previously been unable to find work.
3. They lack the necessary schooling, training, skills, or experience.
4. Employers think they are too young or too old, or they face some other type of discrimination.

Economics in Christian Perspective: Theory, Policy and Life Choices

Economics in Christian Perspective: Theory, Policy and Life Choices

There is considerable debate in the public square these days about a number of issues that have significant economic components. Globalization, environmental protection, and aiding the poor are just a few. Decisions we make in our personal lives are influenced by our assumptions about economic realities as well. So how might mainstream economics connect with Christian values and principles?

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  • DL

    Very helpful article, Joe. Thanks for writing that.

    This is a bit of a rabbit trail, but one thing that is bothersome to me, which I believe needs further investigation, is the way companies have become accustom to letting people go. The phrase “Terminated without cause” to me ought to pose a legal and moral dilemma. True, companies that operate in an “at will” state can technically chose to let go of whomever they wish whenever they wish for no reason. Although that rule does not necessarily keep them from being sued.

    So, what is interesting is that in most “terminated without cause” situations there is a severance arrangement in which the employee must waive their right to sue in order to receive severance and to to be granted the correct category so they can collect unemployment insurance. If the employee was terminated for cause, then the unemployment insurance, would not be an option unless the employee sued and won.

    My whole point is that unemployment insurance has created a revolving door mentality where it is entirely too easy for for companies to get just rid of people whenever a corporate financial hiccup occurs. Getting rid of people really ought to be the toughest decision employers have to make, but the current rules tend to promote it as a regular thing.
    Thanks!!!

    • http://Culture11.com Joe Carter

      DL,

      I share your concern, but don’t think I’d agree with the solution. You say, “Getting rid of people really ought to be the toughest decision employers have to make. . .” The problem with that it that provides an unfortunate negative incentive: If firing is the toughest decision an employer has to make, then it makes them very leery of hiring people in the first place.

      Unfortunately, that is part of the reason unemployment is currently higher than it needs to be now. Companies could probably use the extra hands but what if something happens and the economy begins to decline? If they are unable to layoff the employees, then they would probably be better off not hiring them in the first place.

      Personally, I think hiring and firing decisions should be much easier (at least as easy as for the employee to stay or go). On individual cases it could be detrimental, but overall more people would be able to find employment.

      • DL

        Sure, but laying people off is far better than termination.
        Problem is, other than in situations where a union is involved, lay-offs are extinct. Nobody gets laid off anymore unless their is a protection in place against wrongful termination.

        I understand what you’re saying about companies not hiring as freely or as often if it is harder to remove someone, but that is what temporary/probationary periods should be used for.

        Plus, if the revolving door was slowed by toughening up on firing practices, then there would be less of a need to rehire new people all of the time.

        I know. Those days are over. Young people “Want” to move around every 2 or 3 years and they have the most to gain by accelerated hiring rates. But for those of us in the 50-60s age range, the workplace dynamics driving this stuff is pretty scary stuff.

    • http://rdmckinney.blogspot.com/ Roger D. McKinney

      Only employers can decide when they have enough or too many workers. No one else has the necessary information. Why would an employer get rid of employees they need?

      That said, the pattern before the Great D was for companies to reduce everyone’s wages and not fire or lay off anyone. That makes a lot more sense. Companies changed because unions refused to take pay cuts and Hoover made businesses promise not to cut wages. With business declining companies had no choice but to get rid of workers.

      Behind every problem in the economy stands a bureaucrat.