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

12
10
The average unemployment rate,
1960–2003, was 5.9%.
UNEMPLOYMENT RATE (%)
8
6
4
2
0
1960 1965 1970 1975 1980 1985 1990 1995 2000
Figure 22.2
OVERALL U.S.
UNEMPLOYMENT RATE
Unemployment in the United States rises during recessions and falls during booms.
Between 1960 and 2003, it averaged 5.9 percent. It reached a low of 3.5 percent during
1969 and a high of 9.7 percent in 1982.
SOURCE: Economic Report of the President (2004).
labor force. If there are 127 million workers employed and 6 million say they are
looking for a job but cannot find one, then the total labor force is 133 million, and the
unemployment rate =
=
number unemployed
labor force
number unemployed
number employed + number unemployed
6 million
= =
127 million + 6 million
4.5 percent.
The unemployment rate does not include individuals who are not working but who
also are not actively seeking a job. Such individuals are not counted as part of the
labor force.
Figure 22.2 plots the unemployment rate for the United States since 1960. The
figure illustrates two facts. First, unemployment is persistent; it has averaged just
under 6 percent since 1960, and the lowest it has been during this period was 3.5
percent (in 1969). Second, the level of unemployment can fluctuate dramatically. By
the end of the 1990s, unemployment in the United States had fallen to levels not
seen in thirty years, but as recently as 1983, the unemployment rate was nearly 10
percent. Fluctuations in unemployment were even more pronounced in earlier periods.
In the worst days of the Great Depression of the 1930s, more than one-fourth of
500 ∂ CHAPTER 22 MEASURING OUTPUT AND UNEMPLOYMENT