Question

Suppose 500 people were surveyed, and of those 500,450 were working full time. Of the 50 not working, 10 were full-time college students, 18 were retired, 5 were under 16 years of age, 7 had stopped looking for work because they believed there were no jobs for them, and 10 were actively looking for work. a. How many of the 500 surveyed are in the labor force? b. What is the unemployment rate among the 500 surveyed people?

Short answer

Answer: The unemployment rate among the 500 surveyed people is 2.17%.

Step-by-step solution

Understanding the labor force and unemployment rate definitions.

The labor force refers to the total number of people who are employed or are actively looking for work, excluding people who are not seeking employment, like retired, full-time students, etc. The unemployment rate is the percentage of the labor force that is actively looking for work but is not employed.

Part a. Calculate the number of people in the labor force.

To find the number of people in the labor force, we will consider those who are working full-time, as well as those who are actively looking for work. According to the survey, 450 people are working full-time, and 10 are actively looking for work. So, the labor force is 450 + 10 = 460 people.

Part b. Calculate the unemployment rate among the 500 surveyed people.

Now that we know the labor force (460 people), we can calculate the unemployment rate by dividing the number of people actively looking for work (10 people) by the number of people in the labor force (460 people): Unemployment rate = (number of people actively looking for work) / (labor force) Unemployment rate = (10) / (460) Unemployment rate = 0.0217 To express it as a percentage, we multiply the result by 100: Unemployment rate = 0.0217 * 100 = 2.17 % The unemployment rate among the 500 surveyed people is 2.17 %.

Key concepts

Labor Force

The term 'labor force' refers to a specific group of people within the broader population. It includes all individuals who are either actively working or actively seeking work. In simplest terms, it is the sum of all employed and unemployed people who are available for and seeking work in the economy.
When considering the labor force, it's essential to exclude certain categories of people such as:

• Full-time students who are not seeking work.
• Retired individuals who are naturally out of the job market.
• Underage individuals who are generally below the working age limit.
• People who have stopped looking for work due to discouragement.

The inclusion of only those working or seeking work helps provide a clearer picture of employment dynamics within an economy. In the given survey data, 450 people are employed, and 10 are actively seeking employment, bringing our total labor force count to 460 individuals.

Employment

Employment refers to the situation where individuals are working and receiving remuneration for their labor. It is one of the most crucial components of economic health. In the surveyed group, 450 individuals were noted as working full-time,
suggesting that they are actively contributing to workforce productivity and economic output.
People are generally considered employed if they hold a job that demands their regular input, for which they are compensated with wages or salaries. Employment is not just about earning a paycheck; it influences quality of life, economic stability, and plays a role in societal progress. Additionally, employment rates can indicate the economic cycle — in a prosperous economy, employment rates are typically high.

Job Seeking

Job seeking is the process through which individuals who are not currently employed actively search for employment opportunities. This group forms a part of the labor force
when evaluating employment statistics. People who are job seeking may use various methods such as

• Networking and making connections.
• Applying to job listings and sending resumes.
• Attending job fairs and recruiting events.
• Utilizing online job portals and career services.

For the surveyed group, 10 people were identified as actively looking for work. Being actively engaged in the job market signifies that these individuals are attempting to enter or re-enter the workforce, making them an essential part of labor force calculations. This subset also forms the basis for calculating unemployment rates.

Economic Survey

An economic survey is a structured method of collecting and analyzing data regarding various economic factors, including employment and unemployment rates within a population. These surveys serve as a critical tool for understanding the economic status and trends.
When conducting an economic survey, the data collected can include information on age, education, employment status, earnings, and more. In our example survey with 500 respondents:

• 450 are working full-time.
• 50 are without full-time work.

Breaking down the 50 without full-time work, we analyzed reasons such as being a student, retired, or being under the legal working age, providing nuanced insights into labor force dynamics. Economic surveys like this not only help in assessing current economic health but also aid policymakers in making informed decisions about creating jobs and fostering economic growth.