Excluding discouraged workers from the official unemployment rate may cause the
ID: 1163514 • Letter: E
Question
Excluding discouraged workers from the official unemployment rate may cause the official rate to (overstate/understate) the true extent of underemployment.
Which of the following statements correctly describe discouraged workers? (If none of the choices apply, leave all of the checkboxes blank.) Check all that apply. They have given up on looking for a job. They are full-time workers who would like to work only part-time. They are counted as part of the labor force by the Bureau of Labor Statistics. They have not looked for a job in 4 weeks (or longer), but they would like a job and are available for work. The following table contains U.S. employment information from February 2010. Civilian Population (Persons 16 years old and over) 236,998,000 Employed (Persons) 138,698,000 Unemployed (Persons) 14,860,000 Discouraged (Persons) 1,204,000Explanation / Answer
Discouraged workers are those workers who are not looking for job as they believe that no job is available for them or feel that their skill set is not appropriate enough for jobs available so that they can get job.
Thus, it can be stated that discouraged workers are those who have given up on looking for a job.
Hence, the correct answer is the option (1) [They have given up on looking for a job].
Labor force = Employed + Unemployed
Labor force = 138,698,000 + 14,860,000
Labor force = 153,558,000
Calculate the official unemployment rate -
Official unemployment rate = [Unemployed/Labor force] * 100
Official unemployment rate = [14,860,000/153,558,000] * 100 = 9.68%
The official unemployment rate is 9.68 percent.
Calculate the U-4 Measure of Labor Underutilization -
U-4 = [(unemployed+discouraged)/(labor force+discouraged)] * 100
U-4 = [(14,860,000+1,204,000)/(153,558,000+1,204,000)] * 100
U-4 = [16,064,000/154,762,000] * 100
U-4 = 10.38%
The U-4 Measure of Labor underutilization is 10.38 percent.
Excluding discouraged workers from the official unemployment rate may cause the official rate to understate the tru extent of underemployment.
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