Unemployment

• 1. Introduction

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  Unemployment sits at the center of nearly every major economic and political crisis in modern history. In 2018, the UN's International Labour Organization counted 172 million people worldwide, or 5% of the reported global workforce, without a job. That figure captures only those actively looking for work. Millions more have given up searching, work too few hours, or are trapped in jobs that make no use of their skills. What does it actually mean to be unemployed? How is it measured, and how often does that measurement fall short? Why do some economists argue that a certain level of unemployment is not only inevitable but useful? And what happens to people, families, and governments when joblessness runs high and persists? Those are the questions this documentary sets out to answer.

• 2. Defining the Jobless

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  The International Labour Organization defines an unemployed worker as someone not currently working but willing and able to work for pay, available to start, and who has actively searched within the prior four weeks. Active searching means making contact with an employer, attending interviews, sending applications, or responding to advertisements. Simply browsing job listings without responding does not count.

  Beyond that narrow definition, economists recognise several overlapping categories. Voluntary unemployment covers workers who reject wages they consider too low. Involuntary unemployment covers those fired because of economic crisis, industrial decline, company bankruptcy, or restructuring. Cyclical, structural, and classical unemployment are all largely involuntary in nature, though the line between types is not always clean.

  Hidden unemployment is especially important. People who have given up looking for work entirely are not counted in official statistics. Neither are those on government retraining programs, those working fewer hours than they want, or those in full-time education. In some countries, native societies surviving through gathering, hunting, and farming in wilderness areas may not be counted at all. Because of these gaps, economists Lawrence F. Katz and Alan B. Krueger estimated in 1999 that increased incarceration alone lowered the measured US unemployment rate by 0.17% between 1985 and the late 1990s.

• 3. Types and Theories

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  Structural unemployment emerges when the skills unemployed workers possess do not match the skills employers need. It is closely linked to disruptive technologies and globalization, and it is hard to separate in practice from frictional unemployment, except that it tends to last longer. When an economy suffers prolonged low demand, workers' skills erode and their job-search abilities rust. Problems with debt can push them into poverty, and that can make them unable to fill the vacancies that reappear when the economy recovers. Economists call this persistence of structural unemployment "hysteresis," or path dependence.

  Frictional unemployment is the gap between jobs when a worker is searching or transitioning. It is sometimes voluntary, since it reflects an individual's decision to hold out for a better match in pay, location, skills, or working conditions. New graduates and people re-entering the workforce after raising children both experience frictional spells. The Beveridge curve, a downward-sloping convex graph, illustrates the relationship between unemployment and job vacancies; shifts in labour market frictions move the curve inward or outward.

  Classical, or real-wage, unemployment occurs when wages are set above the market-clearing level, producing more job-seekers than vacancies. Economists Richard Vedder and Lowell Gallaway, in Out of Work: Unemployment and Government in the Twentieth-Century America, found a strong correlation between adjusted real wages and unemployment in the United States from 1900 to 1990. Meanwhile, Karl Marx offered a different frame entirely: he argued that unemployment is not an accident but an inherent feature of capitalism, providing a reserve army of labour that keeps wages low and profits high.

• 4. Measuring the Rate

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  Measuring unemployment is harder than it sounds, and different countries do it differently. The United States uses a labour force survey, the Current Population Survey, based on a sample of 60,000 households. Some European countries rely on registered unemployed citizens instead. Because of these differences, the OECD, Eurostat, and the International Labor Comparisons Program all adjust national data to make international comparisons possible.

  Eurostat defines unemployed persons as those aged 15 to 74 who are not working, have looked for work in the last four weeks, and can start within two weeks. The Bureau of Labor Statistics in the United States calculates six alternate measures, U1 through U6. The official rate, U3, counts those without jobs who have actively looked in the past four weeks. U6, the broadest measure, adds part-time workers who want full-time work and cannot find it for economic reasons. In January 2008, the US unemployment rates by group ranged from 3.2% for Asian Americans and 4.2% for adult women to 9.2% for African Americans and 18.0% for teenagers.

  One instructive comparison from the fourth quarter of 2004 illustrates the limits of any single metric. According to OECD data, normalised unemployment for men aged 25 to 54 was 4.6% in the United States and 7.4% in France, suggesting France was performing far worse. But the employment rate, which divides actual workers by total population in that group, was 86.3% in the US and 86.7% in France. More people in that age group were actually working in France, despite the higher unemployment rate. The National Bureau of Economic Research does not use the unemployment rate at all when dating recessions, preferring various employment rates instead.

• 5. The Human Cost

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  Failure to pay rent or a mortgage because of job loss can lead directly to homelessness through eviction or foreclosure. Unemployment also increases susceptibility to cardiovascular disease, anxiety disorders, depression, and suicide. Unemployed people show higher rates of tobacco use, alcohol consumption, drug use, poor diet, and lower rates of exercise.

  In 1979, M. Harvey Brenner calculated that for every 10% increase in the number of unemployed, total mortality rises by 1.2%, cardiovascular disease by 1.7%, cirrhosis cases by 1.3%, suicides by 1.7%, arrests by 4.0%, and assaults reported to police by 0.8%. A study from 2000 by Christopher Ruhm offered a complicating counterpoint: several health measures actually improve during recessions, though the reasons are contested.

  A prospective study of 9,570 individuals over four years found that highly conscientious people suffered more than twice as much as others when they became unemployed. A 2014 study by Van der Meer found that the stigma of unemployment affects personal well-being especially strongly for men, who often feel their masculine identity is threatened by job loss. Professor Ian Hickie of the University of Sydney noted that men have more work-based social networks than women, so losing a job can quickly lead to full social isolation. A 2015 study published in The Lancet estimated that unemployment causes 45,000 suicides a year globally.

  A 2008 study by Covizzi found that the divorce rate is higher for couples when one partner is unemployed. However, a separate study found that some couples remain in unhealthy marriages during unemployment specifically to share financial costs. Long-term unemployment is defined by European Union statistics as lasting more than one year; over two years qualifies as very long-term. The US Bureau of Labor Statistics sets its threshold at 27 weeks.

• 6. Women, Youth, and Participation

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  Male labour force participation in the United States decreased from 1953 to 2013. Women's participation followed the opposite arc for most of that period. From the late 19th century to the 1920s, very few women worked outside the home; those who did were mostly young, single women in textile manufacturing or domestic service, who typically left the workforce upon marriage.

  Between 1930 and 1950, female participation rose because of increased demand for office workers, women's entry into the high school movement, and electrification, which reduced the time spent on household chores. From the mid-1970s to the late 1990s, a period of revolution in women's workforce participation unfolded, driven partly by the second-wave feminism movement. Women invested in college majors that prepared them for careers. The female labour force participation rate in the United States rose from approximately 33% in 1948 to a peak of 60.3% in 2000. As of April 2015, it had fallen back to 56.6%, matching 1988 levels.

  Among the factors credited with driving the rise: the availability of birth control pills, which let women plan around fertility; the Equal Pay Act of 1963, which aimed to abolish wage disparity based on sex; the shift from physical to service-sector work, which eliminated many traditionally male occupations; and a trend of men delaying marriage, which gave women more time to establish careers before family decisions pressed in. Only 40% of the population actually used the birth control pill, however, implying that other forces were also at work.

  Youth unemployment, covering ages 15 to 24, is higher than general unemployment in many countries. A 2007 study by Jacob and Kleinert found that young people aged 18 to 24 with fewer resources and limited work experience are more likely to be unemployed. Unemployment of young adults has been associated with political instability and, in some cases, revolution.

• 7. Political Consequences

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  The fall of the Weimar Republic in 1933 and Adolf Hitler's rise to power, which led to World War II and the deaths of tens of millions across Europe, is attributed in large part to poor economic conditions in Germany, including an unemployment rate above 20%. The hyperinflation that damaged democratic institutions occurred primarily in 1921 to 1923, the year of Hitler's Beer Hall Putsch. By the time the Nazis assumed government in 1933, ten years had passed since the hyperinflation, but mass unemployment was ongoing.

  In the United Kingdom, rising unemployment had long been considered a near-certain route to electoral defeat for any sitting government. That assumption held until 1983, when Margaret Thatcher won the general election despite presiding over a rise in unemployment from 1.5 million to 3.2 million since the 1979 election and a decrease in her share of the popular vote. A study found that unemployment is associated with decreased trust in democracy more broadly.

  Governments have attempted to counter unemployment through both demand-side and supply-side measures. Demand-side approaches include deficit spending, expansionary monetary policy to lower interest rates, and direct employment programs. In Britain, publicly funded employment of the able-bodied poor ran from the 17th century until 1948 through the institution of the workhouse. In the United States, the Works Progress Administration employed millions during the Great Depression; by 1936, the combined WPA and other federal work programs employed close to 1.995 million workers. The Social Security Act of 1935 established the American unemployment insurance system, which compensates workers for roughly one third of previous income, though fewer than 40% of eligible workers apply for and receive benefits.

• 8. A Historical Arc

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  Before industrialization, unemployment as a concept did not exist in the same way. Traditional self-sufficient societies had no framework for it. In 16th-century England, no distinction was made between vagrants and the jobless; both were classified as "sturdy beggars" to be punished and moved along.

  The closing of the monasteries in the 1530s deepened poverty by removing the Roman Catholic Church's charitable role. A bill drawn up in 1535 proposed a system of public works funded by a tax on income and capital. A law passed the following year allowed vagabonds to be whipped and hanged. In 1547, legislation subjected vagrants to two years of servitude and branding with a "V" for a first offense, and death for a second. During the reign of Henry VIII, as many as 72,000 people are estimated to have been executed. The Poor Relief Act 1601, one of the world's first government-sponsored welfare programs, drew a formal distinction between those unable to work and able-bodied people who refused employment.

  By 1776, some 1,912 parish and corporation workhouses had been established in England and Wales, housing almost 100,000 paupers. Frederick Engels described the miserable living standards of mill workers in England in 1844 in The Condition of the Working Class in England in 1844; in his preface to the 1892 edition, he noted that the extreme poverty he had written about had largely disappeared. By the 1920s, the average workweek in the US was 49 hours, reduced to 40 hours under the 1933 National Industrial Recovery Act. The United Kingdom in the 1950s and 1960s averaged 1.6% unemployment, and Australia's 1945 White Paper on Full Employment established a full-employment policy that lasted until the 1970s.