What is Unemployment? How To Calculate It, Types, Causes

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    unemployment benefits

    What is Unemployment?

    Unemployment refers to a situation in which an individual who has reached the age of working is interested in working but is unable to find work. Unemployment is the situation of a person who can operate and is searching for work but has not been able to find an employment opportunity. Unemployed people is an active member of the workforce, is seeking to find a job but is not in a position currently, and has actively searched for work in the last four weeks. Unemployment statistics are studied and collected by the labor departments of the government in wealthy countries.

    These figures are considered the most important indicator of the nation’s economy. However, differences in statistics and trends in unemployment among different categories of the population are examined to determine economic conditions. The statistics serve as the possible governmental basis. The official term “unemployment” is the state where an individual who participates in the labor market is looking for work but is unable to find employment opportunities. The term “unemployment” is also used as unemployment. The government defines the term “workforce” as encompassing both those who are unemployed as well as those who are employed. In addition, unemployment is a condition when an individual has the ability and is willing to work but cannot find work.

    Understanding Unemployment

    Unemployment is an important economic indicator as it reveals people’s capacity (or inability) to find jobs that pay and contribute to the production productivity of an economy. Unemployed workers mean less economic output.

    The definition of unemployment doesn’t cover those who quit the workforce due to reasons like retirement, higher education, or disabilities.

    Sign of Economic Distress

    Unemployed workers must have at least subsistence levels of consumption when unemployed. This means that an economic system with high unemployment is less productive. production, without a significant decrease in the demand for essential consumption.

    A prolonged, high unemployment rate could indicate a serious market problem and lead to political and social turmoil.

    Sign of Overheating Economy

    A low unemployment rate, in contrast, implies an economy that is much more likely to produce at or near its full capacity, which will maximize output, boost wage growth, and raise the standard of living as time passes.

    But, a very low unemployment rate is also an indication of an overheated economy as well as inflationary pressures and the tightness of conditions for businesses that require more workers.

    Categories of Unemployment

    The notion of what constitutes unemployment is quite clear economists categorize unemployment into a variety of types. The two most common classifications are involuntary and voluntary unemployment. Unemployment is voluntary when a person quits their job at will to find a new job. When it’s not voluntary, the person is dismissed or laid off and must seek a new job.

    Source: U.S. Bureau of Labor Statistics  

    4 Types of Unemployment and Their Causes

    Four primary kinds of unemployment can be found in the economy: structural, frictional, and cyclical, as well as seasonal. A different reason triggers each.

    1. Frictional unemployment: It is caused by short-term changes in people’s lives, for instance, moving to a new location and must find new employment. It also affects those new to the workforce, like newly graduated college students. This is the most prevalent reason for unemployment and is always in the economy.
    2. Structural unemployment is caused by an inconsistency between the demographics of the workforce and the type of jobs they can fill if people don’t have the qualifications and/or when there are people in demand. Still, there are no jobs to fill them. The most evident signs of structural unemployment are when industries are experiencing technological advances. For instance, in the agriculture sector, a lot of work is now automated, meaning fewer farmers are required and more are dismissed. If the farmers move to cities to look for jobs and jobs, they might not find comparable jobs to put their talents into practice.
    3. Cyclical unemployment: It is caused by a decline in demand. Companies cannot provide jobs if there isn’t enough demand in the economy for products and services. Based on Keynesian economics, cyclical unemployment is a natural consequence due to the economic cycle during times of recession. When all consumers are scared all at once, they are likely to try to save more money simultaneously, and there will decrease in spending, and companies will be unable to recruit all available workers.
    4. Seasonal unemployment: This is because different sectors or areas of the labor market have different opportunities during the seasons. In the case of unemployment, it tends to go higher in winter since many agricultural jobs end when the harvest is completed in autumn, and workers are forced to search for new employment.

    How do you calculate the unemployment rate?

    The unemployment rate is the total number of unemployed people divided by the available civil labor force at any moment in time.

    Unemployment Rate = Unemployed/ Civilian Labor Force.

    How do I apply for unemployment insurance?

    The U.S. Department of Labor’s programs for unemployment insurance provides unemployment assistance to employees who are laid off for no reason of their own and meet certain qualifications.

    The unemployment insurance program is a state-federal program that provides cash compensation to those who qualify. Each state has its unemployment insurance program; however, all states must follow the same rules set forth under federal legislation.

    Verify your eligibility

    Every state has unemployment requirements; however, the general rule is that you can be eligible if:

    Are not employed due to no cause on your part. In many states, you must have quit your previous job because of an absence of employment.

    Work and wage requirements must be met. It is your responsibility to meet the state’s requirements for the number of wages you earn or the time you worked over the specified time known as”a “base period.” (In many states, this is typically the first four quarters of the five completed calendar quarters before the date that your claim is submitted.)

    Be able to meet any additional state requirements of your state. Find out more information about the requirements of your state’s requirements.

    How to apply?

    To receive unemployment insurance benefits, you must claim an unemployment insurance plan from the state you worked in. According to the state of your employment, the claim may be submitted in person, over the phone, or via the internet.

    You must get in touch with your local unemployment compensation program as soon as you can when you become unemployed.

    You need to submit your claim to the state where you worked. However, if you were employed in a different state than the one in which you currently reside or in several states, the unemployment insurance office in which you reside will provide you with information on how to submit your claim to different states.

    If you make claims, you’ll be required to provide certain details, including addresses and dates of prior jobs. To ensure that your claim is not delayed, ensure that you provide complete and accurate details.

    It typically takes between two and three weeks from the time you file your claim to receive your first benefit payment.

    Causes for Unemployment

    Many reasons lead to unemployment, and the reason for it is based on the current economic conditions and how people perceive them. Here are some of the causes of unemployment:

    Technology advancement is one of the main reasons for job loss. With the advancement of technology, employers are looking for workers with the most advanced technical skills. Therefore, they seek out better substitutes. Reducing jobs due to technological changes causes unemployment issues in society.

    The recession is the primary cause of unemployment in the majority of countries. The economic crisis in one country could impact the economies of other countries because of globalization.

    Global Markets and their changes are other significant aspects. For example, the economy of any country is adversely affected when exports fall off due to fluctuations in global markets and a rise in prices. As a result, production is affected, and companies are unable to pay their bills on time, which causes a rise in unemployment.

    Unsatisfaction with work by many employees is a different reason, and this is caused by the fact that employers pay less focus to the performance of employees. This causes an absence of motivation and a desire to work, and eventually, unemployment is inevitable as employees are systematically let go of their jobs.

    Employer discrimination is based on race, caste, religion, etc. Within the company, employees lose their ability to work for the company.

    Employees’ negative attitudes toward their employers can lead to a negative atmosphere within the workplace. This can lead to joblessness.

    Unemployment: Challenges to Individuals


    It’s not only the duty that the federal government has to lead to reduce the issue of unemployment, and even the individual has to do their part to solve the issue. A lot of changes have to be made by people to get out of the current situation. Without making rash decisions such as suicide or frustration, they should plan and implement appropriate adjustments such as debt adjustments and liquid assets. They can also expend the funds whenever they need to, cut back on their expenses, and encourage family members to get jobs to make a profit.

    A person must increase their abilities and take part in the right training and counselling classes to increase their performance and capabilities. In addition, it is essential to consider working for themselves, besides their jobs, with the assistance of their family members. This can also increase their living standards.

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