1. Describe the recent rate of unemployment and how it has changed over the last year.
According to the bureau of labor statistics, as December of 2014 the employment rate in the U.S reached 5.6%, when compared to of December 2013 we have seen significant drop as it was 6.7%. Within the last 5 years, this is the lowest unemployment rate we have seen, the highest unemployment rate in the US was back in October of 2009 when it was 10% and California was 12.1% (Bls.gov, 2015).
2. Explain what has driven the unemployment rate and any recent changes.
NBC reported in December the unemployment rate was at 5.6%, due to the creation of new jobs in different industries, but in the same report it was pointed out that the labor force size had gone down to 62%. So is this a true number?
3. Describe the role of cyclical, structural and frictional unemployment in the current unemployment situation.
Cyclical unemployment (no job vacancies), it never exist at the peak of economy while other forms of unemployment can be seen in a healthy economy, it is an indicator of demand (Levine, 2013). In the last few years, production slowed, people made less money, took fewer vacations, decreased use of restaurants and entertainments, stopped using services that they used in the past. All these factors contributed to lack of positions and less demand to fill these jobs
Structural unemployment, defined as the mismatched between the skills or location of job seekers and the positions available and their locations. This is due to obstacles getting the job rather than finding them, which prolongs the unemployment process. For example, one of the sectors that has seen little loss of employment is the computer design and IT, but this sector requires special skills and qualification that not everyone in the work force can do, but may be retrained, and that takes time and delays filling these positions (Effron, 2014).
Frictional employment, defined as the period of unemployment when people move between jobs or moving into the job markets. This usually takes less time than structural reasons (Levine, 2013)
4. Forecast the unemployment rate over the next three years and explain your answer.
Forecasting unemployment is a science by itself, different tools mat be used but all refer to the same metrics; trends of past years, the size of the population and the frowth in the last few years, size of labor force and the participants. In the last 5 years we noted a a trend, the unemployment rates dipped quickly after its peak and then the drop became less steep and eventually fluctuated arounf the inflationary flash point ( which varied over the years but economists agreed to a rate between 4-6%. So I believe the unemployment rate will go through its quarterly, seasonal