What Determines Whether a Worker is Unemployed or Not?

One of the major problems confronting every modern economy is that of unemployment. It is an economic condition in which the number of people who are willing and able to work but are without a job.

Unemployment is a stock concept measured at a point in time; it is an indication of the resources of the country that is presently unutilized.

The implications of unemployment in an economy are grievous. First, it implies that the economy is operating at below full employment level in which case it means that the society is foregoing some potential output. Second, it will increase the pressure on those who are presently working since they have to cater for their unemployed relatives or in some cases part of their taxes will be used to provide for the unemployed. Third, it could also lead to increment in social menace such as armed robberies, prostitution, etc. Therefore, What determines whether a worker is unemployed or not?

What Determines Whether a Worker is Unemployed or Not?

Because of the difficulty of developing an objective set of criteria which could be readily used in a monthly household survey, no official government statistics are available on the total number of persons who might be viewed as underemployed. Even if many or most could be identified, it would still be difficult to quantify the loss to the economy of such underemployment.

More recently in most other countries, the number of people registered in unemployment offices are the only available source of data on unemployment, and only those workers who were registered in unemployment offices were counted as unemployed. No doubt that this system is a poor measure of employment and unemployment of a country. How many of the truly unemployed actually registered varied both across countries and across tie.

So, what determines whether a worker is defined as unemployed or not is that  somebody is classified as employed if he or she has a job at the time of the interview; and classifies somebody as unemployed if he or she does not have a job and has been looking for work for a long time. Most countries use a similar concept of unemployment, although the definition of what “looking for work” means exactly varies across countries.

Ordinarily, you know that the employed refers to people who are doing some work for a living. This naturally includes those who are self-employed. Conversely, the unemployed are those who are willing to work but are not currently employed. What is Employment and Unemployment?

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• Unemployment

Unemployment is a term referring to individuals who are employable and actively seeking a job but are unable to find a job. Included in this group are those people in the workforce who are working but do not have an appropriate job. Usually measured by the unemployment rate, which is dividing the number of unemployed people by the total number of people in the workforce, unemployment serves as one of the indicators of a country’s economic status.

The term “unemployment” is often misunderstood, it as it includes people who are waiting to return to a job after being discharged, yet it does not include individuals who have stopped looking for work in the past four weeks due to various reasons such as leaving work to pursue higher education, retirement, disability, and personal issues. Also people who are not actively seeking a job but do want to work are not classified as unemployed.

Interestingly, people who have not looked for a job in the past four weeks but have been actively seeking one in the last 12 months are put into a category called the “marginally attached to the labor force.” Within this category is another category called “discouraged workers,” which refers to people who have given up looking for a job.

• Employment

Employment refers to the idea that an individual has entered some form of verbal or written commitment with an entity, known as the employer, under certain stipulations such as payment, schedule, etc. Employment is distinctly different from contract work and, as such, is filed in separate manner with the U.S. government.

Organizations use employment daily to fuel their businesses, expand, and increase output. Employment requires that the individual be a legal citizen of the United States or possess a verified work permit. The Internal Revenue Service (IRS) is in charge of tracking employment for both the individuals and the entities that employ them.