Five Facts on Unemployment in the USA
When the United States entered a recession in late 2007, unemployment rose to its highest levels in 20 years. While the U.S. economy has slowly recovered, some questions remain ever important: How is unemployment measured? What are the causes of unemployment? Who is more likely to be unemployed? Learning Life presents the following five facts to help answer these enduring questions, and inform public discussion about unemployment in the USA.
As of November 2014, this was the national unemployment rate. The Bureau of Labor Statistics counts someone as unemployed if “they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work.” Thus, those people who are unemployed and available for work, but have not actively looked for work in the past four weeks are not counted as unemployed.
U.S. Bureau of Labor Statistics. “Economy at a Glance — United States.”
U.S. Bureau of Labor Statistics. “Labor Force Statistics from the Current Population Survey — Frequently Asked Questions.”
2) 11.0% vs. 5.1%
As of September 2014, the unemployment rate for African-Americans (11%) versus White Americans (5.1%). Since 1954, when the Bureau of Labor Statistics began to keep detailed data on unemployment rates, White Americans have averaged an unemployment rate of 5%, while the average unemployment rate of African-Americans has been 9.9%.
The causes of this discrepancy are debated, but explanations include a skills gap between white and black Americans, their differing distribution or location in labor markets, and racial discrimination. Racial discrimination explanations include the “last hired, first fired” theory that proposes that in a good economy African-American workers are the last to be hired while in a bad economy they are the first to be laid off. According to the Pew Research Center, evidence does not support the idea that African-Americans are last hired, but there is “considerable support” for the idea that they are the first fired.
U.S. Bureau of Labor Statistics. “Economic News Release: Table A-2: Employment status of the civilian population by race, sex and age.”
Pew Research Center. 2013. “Black unemployment rate is consistently twice that of whites.”
3) 33% vs. 8%
As of 2010, the percentage of young Americans without high school diplomas that were unemployed (33%) versus those with a bachelor’s degree (8%). In all, the unemployment rate for youth 16-24 years old was 26% in 2010, more than double that of “prime age” workers. The reasons for this discrepancy include levels of experience but also the types of industries in which young people often work. Many young people work in retail, leisure and hospitality industries that are sensitive to business cycle fluctuations such as seasonal sales and economic downturns.
U.S. Congress Joint Economic Committee. 2010. “Understanding the Economy: Unemployment among Young Workers.”
4) 500,000 vs. 900,000 Americans
The number of people in the USA who would potentially lose their jobs were there to be an increase in the federal minimum wage to $10.10 per hour in 2016, and then an adjustment in the wage based on inflation every year thereafter. However, if such a minimum wage increase were to take effect in 2016, low-wage workers would get an estimated $31 billion in increased earnings. This would move an estimated 900,000 people out of poverty.
The federal minimum wage is currently $7.25/hour, up from $5.15/hour in 2009. Some states have since enacted higher minimum wages.
Congressional Budget Office. 2014. “The Effects of a Minimum-Wage Increase on Employment and Family Income.” Available at:
5) 4.0% to 9.6%
The lowest and highest rates of unemployment in the United States since 1984. The unemployment rate hit 4.0% in 2000, while it hit 9.6% in 2010.
Unemployment can be due to a variety of factors. Economists organize unemployment causes into types, including the following:
- Frictional unemployment: Unemployment caused by the time it takes someone to move between two events, such as moving from school graduation to a first job, or from layoff or firing to a new job.
- Structural unemployment: When there is a discrepancy between the skills available workers have, and the skills employers need. Within structural unemployment, “occupational immobility” happens when workers face challenges learning the skills of a new industry. “Geographic immobility” refers to the hurdles workers face to move to where jobs are available. Technological change such as automation (i.e., when machines replace workers), and structural change such as the decline of an industry can also lead to higher unemployment rates.
- Real wage unemployment: When workers’ wages become unsustainably high. This can happen in industries where there are too few available but necessary workers, or when employers and worker unions negotiate wages that are too high to sustain in the short or long-term.
- Voluntary unemployment: When a person chooses to stay unemployed. For example, savings, spousal income, unemployment benefits, and/or the prospect of a better job may lead some to choose unemployment over a job with poor wages and/or working conditions.
- Demand-deficient unemployment: When there is not enough consumer demand in an economy. This often leads companies to produce less, and to layoff workers.
U.S. Bureau of Labor Statistics. “Overview of BLS Statistics on Employment.”
Economicshelp.org. “Sources of Unemployment.”