The term unemployment means to be without a job but actively looking for one. Throughout the years the unemployment rate has fluctuated, this was caused by the changes in aggregate demand for the final product. There are three types of unemployment, frictional, structural, and deficient demand. These types of unemployment and the unemployment rate in general have varying effects on gender and races. Unemployment causes problems for the economy with loses to production, but it also provides benefits, from workers who are able to upgrade their positions and salaries. Frictional unemployment is caused by the normal turnover in the labor market and the time it takes to find a new job. It arises from short-term irregularities in the demand for labor by particular industries, which occur apart from general cyclical fluctuations. An example of workers who experience frictional unemployment are clothing manufacturers, whose services are needed more to produce seasonal clothing. When the season is over there is no longer a need for their services, until production starts for the next season. Structural unemployment occurs when workers lack the required skills necessary for the available positions. Instead of a single labor market, there are a large number of sub-markets for particular jobs that have specialized skills. Structural unemployment occurs mainly because of shifts in the demand for labor, in combination with inflexible wage rates and immobile workers. Deficient-demand unemployment is a case where the demand for labor throughout the entire labor force has decreased. This is a result of inadequate aggregate demand in the economy as a whole. Low aggregate demand for output leads directly to low demand for labor. Employers who need to cut labor costs in response to the low demand of out put must either layoff workers or offer early retirement incentives. The practice of reducing wage rates is usually ineffective. It causes employees to accuse the employer of taking advantage of the temporary decline in demand to pay lower wages. This in turn causes a decline in morale and productivity.
Periods of high unemployment lead to recessions. During a recession the full time unemployment rate rises 2 to 4 points, increasing the total number of unemployed by 3 million. With such a high number of the population unemployed it causes a low number of output produced my industries, and with the reduction of income there are less people in the economy spending money. This also leads to a reduction in government income that was received from income tax. One benefit from unemployment is the promotion of some workers who are able to increase their wage and productivity by finding better jobs Unemployment is distributed very unevenly throughout the labor force. Laborers have a much higher likely hood of being unemployed than white-collar workers. The distribution of unemployment throughout laborers is also uneven. Young black teenagers experience the most significant increases in unemployment during a recession. The unemployment rate for all blacks is more than double the rates for whites. Men and women also experience a difference during recessions. Men are usually hired in higher paying cyclically sensitive jobs, whereas women are disproportionately employed in less cyclically sensitive positions, like clerical jobs. The highest difference in the unemployment rate is in age. The unemployment rate of teenagers is three times higher than adults. Teenagers have less experience and lower paying jobs. The high unemployment rate for teenagers is attributed to frictional unemployment. A majority of these teenagers are still students. .