[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

ment represents economic hardship. People unemployed for a long time will be
unable to meet current expenses—utilities, rent, and so on—and will have to move
to less-expensive housing and otherwise reduce their standard of living.
Unemployment not only costs individuals their paychecks, it can deal a powerful
blow to their self-respect, and their families may be forced to choose between
poverty and the bitter taste of government or private charity. Many families break
up under the strain.
Unemployment presents each age group of workers with different problems.
For the young, having a job is necessary to develop job skills. Persistent unemployment
for them not only wastes valuable human resources today but also reduces
the future productivity of the labor force. Young people who remain unemployed
for an extended period are especially prone to becoming alienated from society and
turning to antisocial activities such as crime and drug abuse.
For the middle-aged or elderly worker, losing a job poses different problems.
Despite federal and state prohibitions against age discrimination, employers are
often hesitant to hire older applicants. If older workers are unemployed for long
periods of time, they may lose some of their skills. And the job that the unemployed
older worker does succeed in getting often entails lower wages and less status than
previous jobs and may make less than full use of his or her skills. Such changes
burden the dislocated workers and their families with much stress.
Unemployment is very costly to communities as well. If people in a town are
thrown out of work—say, because a big employer closes down or decides to move—
their neighbors are also likely to suffer, since there is less income circulating to buy
everything from cars and houses to gasoline and groceries. As higher unemployment
results in fewer people paying local taxes, the quality of schools, libraries,
parks, and police can be threatened.
Unemployment also may reinforce racial divisions in a society. The rate of unemployment
for African Americans is generally more than twice that for whites. By
2000, with overall unemployment at its lowest level in thirty years, all groups were
benefiting from the strong labor market—unemployment for African Americans
was lower than at any time since 1969. As the economy entered a recession in 2001,
unemployment rates for all groups rose. By the end of 2002, the unemployment rate
for African Americans peaked at 11.4 percent, while white unemployment was only
5.2 percent. The economy was starting to recover by 2002, but unemployment had
declined only modestly by the end of 2003. By December 2004, though, the unemployment
rate for whites had fallen to 4.6 percent, while the rate for African Americans
was still over 10 percent.
UNEMPLOYMENT STATISTICS
In the United States, unemployment data are collected by the Department of
Labor, which surveys a representative mix of households every month. The survey
takers ask each household whether a member of the household is currently employed,
and if not, whether that member is currently seeking employment. The labor
force is the total number of people employed or actively seeking employment. The
unemployment rate is the ratio of the number seeking employment to the total
UNEMPLOYMENT ∂ 499