Unemployment Rate Stays Steady at Pandemic Low of 3.6 Percent

EconEye Admin

4 years ago

The Labor Department reported that U.S. employers added 390,000 jobs in May. The unemployment rate remained unchanged at 3.6 percent. Millions of Americans continue to quit or switch jobs each month in search of higher pay or better conditions.—washingtonpost.com

Answer the following questions to check your understanding of the story.

If the 390,000 new jobs in May are filled by people who are unemployed, how would the labor force participation rate and unemployment rate change?

The labor force participation rate ______________ and the unemployment rate ______________.

a) doesn’t change; decreases

b) decreases; increases

c) doesn’t change; doesn’t change

d) increases; decreases

If all new jobs are filled by people previously classified as unemployed, does the labor force change? How does the labor force participation rate and the unemployment rate change?

The labor force participation rate is the percentage of the working-age population who are members of the labor force. The labor force is the sum of employed and unemployed. If all new jobs are filled by the unemployed, the labor force doesn’t change, so the labor force participation rate doesn’t change. The unemployment rate is the percentage of people in the labor force who are unemployed. If all new jobs are filled by the unemployed, the number unemployed decreases, and the unemployment rate falls.

The news clip reports that the unemployment rate didn’t change. How can we account for the 390,000 people hired in the new jobs?

If the 390,000 people were previously _____________, then the unemployment rate is unchanged.

a) not in the labor force, but decided to join the labor force

b) employed, but decided to switch to new jobs

c) laid off from their jobs for 30 days and then recalled to work

d) discouraged workers who found new jobs

The unemployment rate is the percentage of people in the labor force who are unemployed. How can 390,000 people be hired in new jobs without changing the unemployment rate?

If the 390,000 people are employed and then switch to a new job, the labor force doesn’t change and the number unemployed doesn’t change, so the unemployment rate remains the same.

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