Unemployment occurs when a person is available to
work and currently seeking work, but the person is
The prevalence of unemployment is
usually measured using the unemployment rate, which
is defined as the percentage of those in the labor
force who are unemployed. The unemployment rate is
also used ineconomic studies and economicindexes such
as the United States'Conference Board's Index of
Leading Indicators as a measure of the state of
There are a variety of different causes of
unemployment, and disagreement on which causes are
most important. Different schools of economic thought
suggest different policies to address
unemployment.Monetarists for example, believe that
controlling inflation to facilitate growth and investment
is more important, and will lead to increased
employment in the long run. Keynesians on the other
hand emphasize the smoothing out of business cycles by
manipulating aggregate demand. There is also
disagreement on how exactly to measure
unemployment. 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.
Main articles: Types of unemployment and Graduate
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.
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
Frictional unemployment occurs when a worker
moves from one job to another. While he searches
for a job he is experiencing frictional unemployment.
This applies for fresh graduates looking for
employment as well. This is a productive part of
the economy, increasing both the worker's long
term welfare and economic efficiency. It is a result of
imperfect information in the labour market, because
if job seekers knew that they would be employed for
a particular job vacancy, almost no time would be
lost in getting a new job, eliminating this form of
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 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.
For example, in the late 1990s there was a tech bubble, creating
demand for computer specialists. In 2000-2001 this bubble collapsed.
A housing bubble soon formed, creating demand for real estate
workers, and many computer workers had to retrain to find
Seasonal unemployment occurs when an occupation is not in demand
at certain seasons.
Cyclical or Keynesian unemployment
Cyclical or Keynesian unemployment, also known as demand
deficient unemployment, occurs when there is not enough aggregate
demand in the economy. This is caused by a business
cycle recession, and wages not falling to meet the equilibrium rate.
There is considerable debate among economists as to the causes of
unemployment. Keynesian economics emphasizes unemployment
resulting from insufficient effective demand for goods and services
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
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's 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/orpolitical 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
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 Schweickartsuggests,
"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.
Libertarian thinkers like F.A. Hayek claimed that unemployment
increases the more the government intervenes into the economy to
try to improve the rights of those with jobs. For example, he asserted
that 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;
They believed that laws restricting layoffs made
businesses less likely to hire in the first place leaving many young
people unemployed and unable to find work.
This school (the Austrian School) argued that 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. The narrative continued by
saying that 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
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 microchiprevolution and the explosion in computer science
and robotising of work even in less developed industrialized
countries is the main reason.
He therefore 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
"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 microchiprevolution'. 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 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. 
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.
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 demand 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
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
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
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 tohomelessness through foreclosure oreviction. Unemployment
increases susceptibility to malnutrition, illness, mental stress, and
loss of self-esteem, leading to depression. According to a study
published in Social Indicator Research, even those who tend to be
optimistic find it difficult to look on the bright side of things when
unemployed. Using interviews and data from German participants
aged 16 to 94 – including individuals coping with the stresses of real
life and not just a volunteering student population – the researchers
determined that even optimists struggled with being unemployed.
Dr. M. 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
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 awelfare 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
The fear of job loss can spur psychological anxiety.
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 thefrictionally
unemployed accepted the first job they were offered, they would be
likely to be operating at below their skill level, reducing the
It is estimated that, during the Great Depression, unemployment due
to sticky wages cost the US economy about $4 trillion.
is many times larger than losses due to monopolies, cartels and
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.
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
Finally, a rising unemployment rate concentrates
the oligopsony power of employers by increasing competition
amongst workers for scarce employment opportunities.
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.
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.
The decade of the 1930s saw the Great Depression in the United
States and many other countries. In 1929, the U.S. unemployment
rate averaged 3%.
In 1933, 25% of all American workers and 37%
of all nonfarm workers were unemployed.
In Cleveland, Ohio, the
unemployment rate was 60%; in Toledo, Ohio, 80%.
Unemployment in Canada reached 27% at the depth of the
Depression in 1933.
In some towns and cities in the north east
of England, unemployment reached as high as 70%.
the unemployment rate reached nearly 25% in 1932.
trading corporation in New York averaged 350 applications a day
from Americans seeking jobs in the Soviet Union.
There were two
million homeless people migrating across the United States. One
Arkansas man walked 900 miles looking for work.
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
ofunderemployment, definition 3.)
—such as those producing plywoodin the U.S. Pacific Northwest—
do not let their members become unemployed unless the co-op itself
goes bankrupt.
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:
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
The ILO describes 4 different methods to calculate the
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 are 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 are collected separately
from the (EU-LFS).
United States Bureau of Labor Statistics
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 are 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
U3: Official unemployment rate per ILO definition.
U4: U3 + "discouraged workers", or those who have stopped
looking for work because current economic conditions make 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
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
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 are 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 &
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. The BLS also
provides a readable concise current Employment Situation Summary,
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, ahomemaker 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
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.
For the fourth quarter of 2004, according to OECD,
(source Employment Outlook 2005 ISBN 92-64-01045-9),
normalized unemployment for men aged 25 to 54 was 4.6% in the
USA and 7.4% inFrance. At the same time and for the same
population the employment rate (number of workers divided by
population) was 86.3% in the U.S. and 86.7% in France.
This example shows that the unemployment rate is 60% higher in
France than in the USA, yet more people in this demographic are
working in France than in the USA, which is counterintuitive if it is
expected that the unemployment rate reflects the health of the labor
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. In particular
the NBER does not use the unemployment rate but prefer various
employment rates to date recessions 
Aiding the unemployed
The most developed countries have aids for the unemployed as part
of the social welfare. 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 theWorks 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
Congress shut down the WPA in late 1943 as World War II created
thousands of jobs in the military.
Unemployed man looking for a job in 1928
Families on relief 1935–41
Relief cases 1936-1941
Monthly average in 1,000
Year 1936 1937 1938 1939 1940 1941
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
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
Year Unemployment (% labor force)
source: Historical Statistics US (1976) series D-86
See also welfare and training.
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.
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.
Main article: 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.
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 andprofitability 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.