Note: 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.