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Unemployed men outside a soup kitchen in Depression-era Chicago, Illinois, the US, 1931

Unemployment, according to the Organisation for Economic Co-operation and Development (OECD), is when persons above a specified age (usually above 15)[1] are not in paid employment or self-employment and are currently available for work during the reference period.[2]

Unemployment is measured by the unemployment rate as the number of persons who are unemployed as a percentage of the labour force (the total number of people employed plus unemployed).[3]

Unemployment can have many sources like this:

Unemployment and the status of the economy can be influenced by a country through for example fiscal policy. Furthermore, the monetary authority of a country like the central bank could influence the availability and cost for money through its monetary policy.

In addition to theories of unemployment, there are a few categorizations of unemployment that are used to more precisely model the effects of unemployment within the economic system. Some of the main types of unemployment include structural unemployment and frictional unemployment, as well as cyclical unemployment, involuntary unemployment, and classical unemployment. Structural unemployment focuses on foundational problems in the economy and inefficiencies inherent in labor markets, including a mismatch between the supply and demand of laborers with necessary skill sets. Structural arguments emphasize causes and solutions related to disruptive technologies and globalization. Discussions of frictional unemployment focus on voluntary decisions to work based on each individuals' valuation of their own work and how that compares to current wage rates plus the time and effort required to find a job. Causes and solutions for frictional unemployment often address job entry threshold and wage rates.

172 Million people globally or 5% of the reported workforce of the world were without a job in 2018 according to the International Labour Organization (ILO).[4]

Because of the difficulty to measure the unemployment rate by for example using surveys like in the United States of America (USA) or through registered unemployed citizens like in some European countries, statistical figures like the employment-to-population ratio could be better suited to evaluate the status of the labor force and the economy if they would be based on people who are registered as for example taxpayer.[5]

Definitions, types, and theories[edit]

The state of being without any work yet looking for work is called unemployment. Economists distinguish between various overlapping types of and theories of unemployment, including cyclical or Keynesian unemployment, frictional unemployment, structural unemployment and classical unemployment. Some additional types of unemployment that are occasionally mentioned are seasonal unemployment, hardcore unemployment, and hidden unemployment.




Classical unemployment[edit]

Classical, or real-wage unemployment, occurs when real wages for a job are set above the market-clearing level causing the number of job-seekers to exceed the number of vacancies. On the other hand, most economists argue that as wages fall below a livable wage many choose to drop out of the labor market and no longer seek employment. This is especially true in countries where low-income families are supported through public welfare systems. In such cases, wages would have to be high enough to motivate people to choose employment over what they receive through public welfare. Wages below a livable wage are likely to result in lower labor market participation in the above-stated scenario. In addition, consumption of goods and services is the primary driver of increased demand for labor. Higher wages lead to workers having more income available to consume goods and services. Therefore, higher wages increase general consumption and as a result demand for labor increases and unemployment decreases.

Many economists have argued that unemployment increases with increased governmental regulation. For example, minimum wage laws raise the cost of some low-skill laborers above market equilibrium, resulting in increased unemployment as people who wish to work at the going rate cannot (as the new and higher enforced wage is now greater than the value of their labour).[6][7] Laws restricting layoffs may make businesses less likely to hire in the first place, as hiring becomes more risky.[7]

However, this argument overly simplifies the relationship between wage rates and unemployment, ignoring numerous factors which contribute to unemployment.[8][9][10][11][12] Some, such as Murray Rothbard, suggest that even social taboos can prevent wages from falling to the market-clearing level.[13]

In Out of Work: Unemployment and Government in the Twentieth-Century America, economists Richard Vedder and Lowell Gallaway argue that the empirical record of wages rates, productivity, and unemployment in America validates classical unemployment theory. Their data shows a strong correlation between adjusted real wage and unemployment in the United States from 1900 to 1990. However, they maintain that their data does not take into account exogenous events.[14]

Cyclical unemployment[edit]

Cyclical, deficient-demand, or Keynesian unemployment, occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work. Demand for most goods and services falls, less production is needed and consequently fewer workers are needed, wages are sticky and do not fall to meet the equilibrium level, and unemployment results.[15] Its name is derived from the frequent ups and downs in the business cycle, although unemployment can also be persistent as occurred during the Great Depression of the 1930s.

With cyclical unemployment, the number of unemployed workers exceeds the number of job vacancies, so that even if all open jobs were filled, some workers would still remain unemployed. Some associate cyclical unemployment with frictional unemployment because the factors that cause the friction are partially caused by cyclical variables. For example, a surprise decrease in the money supply may suddenly inhibit aggregate demand and thus inhibit labor demand.

Keynesian economists, on the other hand, see the lack of supply of jobs as potentially resolvable by government intervention. One suggested intervention involves deficit spending to boost employment and goods demand. Another intervention involves an expansionary monetary policy that increases the supply of money, which should reduce interest rates, which in turn should lead to an increase in non-governmental spending.[16]

Full unemployment[edit]


In demand-based theory, it is possible to abolish cyclical unemployment by increasing the aggregate demand for products and workers. However, eventually the economy hits an "inflation barrier" imposed by the four other kinds of unemployment to the extent that they exist. Historical experience suggests that low unemployment affects inflation in the short term but not the long term.[17] In the long term, the velocity of money supply measures such as the MZM ("money zero maturity", representing cash and equivalent demand deposits) velocity is far more predictive of inflation than low unemployment.[18][19]


One of the major problems with the NAIRU theory is that no one knows exactly what the NAIRU is (while it clearly changes over time).[17] The margin of error can be quite high relative to the actual unemployment rate, making it hard to use the NAIRU in policy-making.[18]



Structural unemployment[edit]







Frictional unemployment[edit]






Hidden unemployment[edit]

Hidden, or covered, unemployment is the unemployment of potential workers that are not reflected in official unemployment statistics, due to the way the statistics are collected. In many countries, only those who have no work but are actively looking for work (and/or qualifying for social security benefits) are counted as unemployed. Those who have given up looking for work (and sometimes those who are on Government "retraining" programs) are not officially counted among the unemployed, even though they are not employed. Hidden unemployment often is a result of deliberate manipulations by the state to make statistics about the country look better (especially for international propaganda purposes), which - to give an example - was a common practice in USSR and the Soviet-occupied satellite states under the Warsaw Pact. Especially in those countries it is often referred to as agrarian unemployment, since it often occurred in agricultural sectors, mostly in rural areas.[21] It was commonly done in a form of early retirement due to lack of vacant jobs for those who did not reach the retirement age yet, or often a situation where increasing the number of employees did not increase the production (creating fake vacancies on paper for people with whom they did not know what to do, how to utilise their potential workforce - whilst not admitting to that inability and paying out the diminutive wages for them to pretend to work and remain silent), thus rendering the overall productivity close to zero. It was a very common problem, and was one of the main reasons for the economic crisis leading to the common people's strikes that later on led to government's response with martial law state in places like Poland, and the eventual downfall of USSR and Soviet occupation over the rest of the subjugated states under the Warsaw Pact.


Long-term unemployment[edit]

Long-term unemployment (LTU) is defined in European Union statistics as unemployment lasting for longer than one year (while unemployment lasting over two years is defined as very long-term unemployment). The United States Bureau of Labor Statistics (BLS), which reports current long-term unemployment rate at 1.9 percent, defines this as unemployment lasting 27 weeks or longer. Long-term unemployment is a component of structural unemployment, which results in long-term unemployment existing in every social group, industry, occupation, and all levels of education.[22]

In 2015 the European Commission published recommendations on how to reduce long-term unemployment.[23] These advised governments to:

  • encourage long-term unemployed people to register with an employment service;
  • provide each registered long-term unemployed person with an individual in-depth assessment to identify their needs and potential within 18 months;
  • offer a tailor-made job integration agreement (JIA) to all registered long-term unemployed within 18 months. These might include measures such as mentoring, help with job search, further education and training, support for housing, transport, child and care services and rehabilitation. Each person would have a single point of contact to access this support, which would be implemented in partnership with employers.

In 2017-2019 it implemented the Long-Term Unemployment project to research solutions implemented by EU member states and produce a toolkit[24] to guide government action. Progress was evaluated[25] in 2019.

Marxian theory of unemployment[edit]

Karl Marx, Theorien über den Mehrwert, 1956



According to Karl Marx, unemployment is inherent within the unstable capitalist system and periodic crises of mass unemployment are to be expected. He theorized that unemployment was inevitable and even a necessary part of the capitalist system, with recovery and regrowth also part of the process.[27] The function of the proletariat within the capitalist system is to provide a "reserve army of labour" that creates downward pressure on wages. This is accomplished by dividing the proletariat into surplus labour (employees) and under-employment (unemployed).[28] This reserve army of labour fight among themselves for scarce jobs at lower and lower wages.

At first glance, unemployment seems inefficient since unemployed workers do not increase profits, but unemployment is profitable within the global capitalist system because unemployment lowers wages which are costs from the perspective of the owners. From this perspective low wages benefit the system by reducing economic rents. Yet, it does not benefit workers; according to Karl Marx, the workers (proletariat) work to benefit the bourgeoisie through their production of capital.[29] Capitalist systems unfairly manipulate the market for labour by perpetuating unemployment which lowers laborers' demands for fair wages. Workers are pitted against one another at the service of increasing profits for owners. As a result of the capitalist mode of production, Marx argued that workers experienced alienation and estrangement through their economic identity.[30]



There are also different ways national statistical agencies measure unemployment. These differences may limit the validity of international comparisons of unemployment data.[32] To some degree these differences remain despite national statistical agencies increasingly adopting the definition of unemployment by the International Labour Organization.[33] To facilitate international comparisons, some organizations, such as the OECD, Eurostat, and International Labor Comparisons Program, adjust data on unemployment for comparability across countries.



According to the OECD, Eurostat and U.S. Bureau of Labor Statistics the unemployment rate is the number of unemployed people as a percentage of the labour force.

"An unemployed person is defined by Eurostat, according to the guidelines of the International Labour Organization, as:

  • someone aged 15 to 74 (in Italy, Spain, the United Kingdom, Iceland, Norway: 16 to 74 years);
  • without work during the reference week;
  • available to start work within the next two weeks (or has already found a job to start within the next three months);
  • actively having sought employment at some time during the last four weeks."[37]

The labour force or workforce, includes both employed (employees and self-employed) and unemployed people, but not the economically inactive, such as pre-school children, school children, students and pensioners.[38]

The unemployment rate of an individual country is usually calculated and reported on a monthly, quarterly and yearly basis by the National Agency of Statistics. Organisations like the OECD report statistics for all its member states.[39]

Certain countries provide unemployment compensation for a certain period of time for unemployed citizens which are registered as unemployed at the government employment agency. Furthermore, pension receivables or claims could depend on the registration at the government employment agency. [40][41]

In many countries like in Germany the unemployment rate is based on the number of people which are registered as unemployed.[42] Other countries like the United States of America (USA) use a labour force survey to calculate the unemployment rate.[43][44]

The ILO describes 4 different methods to calculate the unemployment rate:[45]



In 2013, ILO adopted a resolution to introduce new indicators to measure unemployment rate.[47]

  • LU1: Unemployment rate: [persons in unemployment / labour force] x 100
  • LU2: Combined rate of time-related underemployment and unemployment: [(persons in time-related underemployment + persons in unemployment) / labour force]

x 100

  • LU3: Combined rate of unemployment and potential labour force: [(persons in unemployment + potential labour force) / (extended labour force)] x 100
  • LU4: Composite measure of labour underutilization: [(persons in time-related underemployment + persons in unemployment + potential

labour force) / (extended labour force)] x 100

European Union (Eurostat)[edit]

Unemployment in the European Union, Switzerland and two EEA countries (Iceland and Norway) in March 2017, according to Eurostat
Unemployment rates from 2000–2019 for United States and Japan and European Union.

Eurostat, the statistical office of the European Union, defines unemployed as those persons age 15 to 74 who are not working, have looked for work in the last four weeks, and ready to start work within two weeks, which conform to ILO standards. Both the actual count and rate of unemployment are reported. Statistical data are available by member state, for the European Union as a whole (EU28) as well as for the euro area (EA19). Eurostat also includes a long-term unemployment rate. This is defined as part of the unemployed who have been unemployed for an excess of 1 year.[48]


United States Bureau of Labor statistics[edit]

Unemployment rate in the U.S. by county in 2008.[50]

The Bureau of Labor Statistics measures employment and unemployment (of those over 17 years of age) using two different labor force surveys[51] conducted by the United States Census Bureau (within the United States Department of Commerce) and/or the Bureau of Labor Statistics (within the United States Department of Labor) that gather employment statistics monthly. The Current Population Survey (CPS), or "Household Survey", conducts a survey based on a sample of 60,000 households. This Survey measures the unemployment rate based on the ILO definition.[52]

The Current Employment Statistics survey (CES), or "Payroll Survey", conducts a survey based on a sample of 160,000 businesses and government agencies that represent 400,000 individual employers.[53] This survey measures only civilian nonagricultural employment; thus, it does not calculate an unemployment rate, and it differs from the ILO unemployment rate definition. These two sources have different classification criteria, and usually produce differing results. Additional data are also available from the government, such as the unemployment insurance weekly claims report available from the Office of Workforce Security, within the U.S. Department of Labor Employment & Training Administration.[54] The Bureau of Labor Statistics provides up-to-date numbers via a PDF linked here.[55] The BLS also provides a readable concise current Employment Situation Summary, updated monthly.[56]

U1–U6 since 1950, as reported by the Bureau of Labor Statistics


  • U1:[58] Percentage of labor force unemployed 15 weeks or longer.

Note: "Marginally attached workers" are added to the total labour force for unemployment rate calculation for U4, U5, and U6. The BLS revised the CPS in 1994 and among the changes the measure representing the official unemployment rate was renamed U3 instead of U5.[60] In 2013, Representative Hunter proposed that the Bureau of Labor Statistics use the U5 rate instead of the current U3 rate.[61]

Statistics for the U.S. economy as a whole hide variations among groups. For example, in January 2008 U.S. unemployment rates were 4.4% for adult men, 4.2% for adult women, 4.4% for Caucasians, 6.3% for Hispanics or Latinos (all races), 9.2% for African Americans, 3.2% for Asian Americans, and 18.0% for teenagers.[53] Also, the U.S. unemployment rate would be at least 2% higher if prisoners and jail inmates were counted.[62][63]


US Unemployment 1800–1890
Estimated U.S. Unemployment rate from 1800–1890. All data are estimates based on data compiled by Lebergott.[64] See limitations section below regarding how to interpret unemployment statistics in self-employed, agricultural economies. See image info for complete data.
US Unemployment since 1890
Estimated U.S. Unemployment rate since 1890. 1890–1930 data are from Romer.[65] 1930–1940 data are from Coen.[66] 1940–2011 data are from Bureau of Labor Statistics.[67][68] See image info for complete data.


Limitations of the unemployment definition[edit]

Some critics believe that current methods of measuring unemployment are inaccurate in terms of the impact of unemployment on people as these methods do not take into account the 1.5% of the available working population incarcerated in U.S. prisons (who may or may not be working while incarcerated); those who have lost their jobs and have become discouraged over time from actively looking for work; those who are self-employed or wish to become self-employed, such as tradesmen or building contractors or IT consultants; those who have retired before the official retirement age but would still like to work (involuntary early retirees); those on disability pensions who, while not possessing full health, still wish to work in occupations suitable for their medical conditions; or those who work for payment for as little as one hour per week but would like to work full-time.[69]

These last people are "involuntary part-time" workers, those who are underemployed, e.g., a computer programmer who is working in a retail store until he can find a permanent job, involuntary stay-at-home mothers who would prefer to work, and graduate and professional school students who were unable to find worthwhile jobs after they graduated with their bachelor's degrees.

A government unemployment office with job listings, West Berlin, West Germany, 1982.





It is possible to be neither employed nor unemployed by ILO definitions, i.e., to be outside of the "labour force".[35] These are people who have no job and are not looking for one. Many of these people are going to school or are retired. Family responsibilities keep others out of the labour force. Still others have a physical or mental disability which prevents them from participating in labour force activities. Some people simply elect not to work preferring to be dependent on others for sustenance.



In the early stages of an economic boom, unemployment often rises.[15] This is because people join the labour market (give up studying, start a job hunt, etc.) as a result of the improving job market, but until they have actually found a position they are counted as unemployed. Similarly, during a recession, the increase in the unemployment rate is moderated by people leaving the labour force or being otherwise discounted from the labour force, such as with the self-employed.



Labor force participation rate[edit]


The labor force participation rate is the ratio between the labor force and the overall size of their cohort (national population of the same age range). In the West, during the later half of the 20th century, the labor force participation rate increased significantly, due to an increase in the number of women who entered the workplace.

In the United States, there have been four significant stages of women's participation in the labor force—increases in the 20th century and decreases in the 21st century. Male labor force participation decreased from 1953 until 2013. Since October 2013 men have been increasingly joining the labor force.

During the late 19th century through the 1920s, very few women worked outside the home. They were young single women who typically withdrew from the labor force at marriage unless family needed two incomes. These women worked primarily in the textile manufacturing industry or as domestic workers. This profession empowered women and allowed them to earn a living wage. At times, they were a financial help to their families.

Between 1930 and 1950, female labor force participation increased primarily due to the increased demand for office workers, women's participation in the high school movement, and due to electrification which reduced the time spent on household chores. Between the 1950s to the early 1970s, most women were secondary earners working mainly as secretaries, teachers, nurses, and librarians (pink-collar jobs).

From the mid-1970s to the late 1990s, there was a period of revolution of women in the labor force brought on by various factors, many of which arose from the second wave feminism movement. Women more accurately planned for their future in the work force, investing in more applicable majors in college that prepared them to enter and compete in the labor market. In the United States, the female labor force participation rate rose from approximately 33% in 1948 to a peak of 60.3% in 2000. As of April 2015, the female labor force participation is at 56.6%, the male labor force participation rate is at 69.4% and the total is 62.8%.[74]




At the turn of the 21st century the labor force participation began to reverse its long period of increase. Reasons for this change include a rising share of older workers, an increase in school enrollment rates among young workers and a decrease in female labor force participation.[75]


A historic shift began around the end of the great recession as women began leaving the labor force in the United States and other developed countries.[76] The female labor force participation rate in the United States has steadily decreased since 2009 and as of April 2015 the female labor force participation rate has gone back down to 1988 levels of 56.6%.[74]

Participation rates are defined as follows:

Pop = total population LF = labor force = U + E
LFpop = labor force population
p = participation rate = LF / LFpop
E = number employed e = rate of employment = E / LFpop

The labor force participation rate explains how an increase in the unemployment rate can occur simultaneously with an increase in employment. If a large number of new workers enter the labor force but only a small fraction become employed, then the increase in the number of unemployed workers can outpace the growth in employment.[77]

Unemployment ratio[edit]






Migrant Mother, Dorothea Lange, 1936

Unemployed individuals are unable to earn money to meet financial obligations. Failure to pay mortgage payments or to pay rent may lead to homelessness through foreclosure or eviction.[82] Across the United States the growing ranks of people made homeless in the foreclosure crisis are generating tent cities.[83]

Unemployment increases susceptibility to cardiovascular disease, somatization, anxiety disorders, depression, and suicide. In addition, unemployed people have higher rates of medication use, poor diet, physician visits, tobacco smoking, alcoholic beverage consumption, drug use, and lower rates of exercise.[84] According to a study published in Social Indicator Research, even those who tend to be optimistic find it difficult to look on the bright side of things when unemployed. Using interviews and data from German participants aged 16 to 94—including individuals coping with the stresses of real life and not just a volunteering student population—the researchers determined that even optimists struggled with being unemployed.[85]



Not everyone suffers equally from unemployment. In a prospective study of 9570 individuals over four years, highly conscientious people suffered more than twice as much if they became unemployed.[89] The authors suggested this may be due to conscientious people making different attributions about why they became unemployed, or through experiencing stronger reactions following failure. There is also possibility of reverse causality from poor health to unemployment.[90]


Another cost for the unemployed is that the combination of unemployment, lack of financial resources, and social responsibilities may push unemployed workers to take jobs that do not fit their skills or allow them to use their talents. Unemployment can cause underemployment, and fear of job loss can spur psychological anxiety. As well as anxiety, it can cause depression, lack of confidence, and huge amounts of stress. This stress is increased when the unemployed are faced with health issues, poverty, and lack of relational support.[91]

Another personal cost of unemployment is its impact on relationships. A 2008 study from Covizzi, which examines the relationship between unemployment and divorce, found that the rate of divorce is greater for couples when one partner is unemployed.[92] However, a more recent study has found that some couples often stick together in "unhappy" or "unhealthy" marriages when unemployed to buffer financial costs.[93] A 2014 study by Van der Meer found that the stigma that comes from being unemployed affects personal well-being, especially for men, who often feel as though their masculine identities are threatened by unemployment.[94]

Unemployment can also bring personal costs in relation to gender. One study found that women are more likely to experience unemployment than men and that they are less likely to move from temporary positions to permanent positions.[95] Another study on gender and unemployment found that men, however, are more likely to experience greater stress, depression, and adverse effects from unemployment, largely stemming from the perceived threat to their role as breadwinner.[96] This study found that men expect themselves to be viewed as "less manly" after a job loss than they actually are, and as a result they engage in compensating behaviors, such as financial risk-taking and increased assertiveness, because of it.

Costs of unemployment also vary depending on age. The young and the old are the two largest age groups currently experiencing unemployment.[97] A 2007 study from Jacob and Kleinert found that young people (ages 18 to 24) who have fewer resources and limited work experiences are more likely to be unemployed.[98] Other researchers have found that today's high school seniors place a lower value on work than those in the past, and this is likely because they recognize the limited availability of jobs.[99] At the other end of the age spectrum, studies have found that older individuals have more barriers than younger workers to employment, require stronger social networks to acquire work, and are also less likely to move from temporary to permanent positions.[95][95][97] Additionally, some older people see age discrimination as the reason they are not getting hired.[100]


Demonstration against unemployment in Kerala, South India, India on 27 January 2004



High unemployment can encourage xenophobia and protectionism as workers fear that foreigners are stealing their jobs.[102] Efforts to preserve existing jobs of domestic and native workers include legal barriers against "outsiders" who want jobs, obstacles to immigration, and/or tariffs and similar trade barriers against foreign competitors.


A 2015 study published in The Lancet, estimates that unemployment causes 45,000 suicides a year globally.[103]


Unemployment rate in Germany in 2003 by states.

High levels of unemployment can be causes of civil unrest,[104] in some cases leading to revolution, and particularly totalitarianism. The fall of the Weimar Republic in 1933 and Adolf Hitler's rise to power, which culminated in World War II and the deaths of tens of millions and the destruction of much of the physical capital of Europe, is attributed to the poor economic conditions in Germany at the time, notably a high unemployment rate[105] of above 20%; see Great Depression in Central Europe for details.

Note that the hyperinflation in the Weimar Republic is not directly blamed for the Nazi rise—the Hyperinflation in the Weimar Republic occurred primarily in the period 1921–23, which was contemporary with Hitler's Beer Hall Putsch of 1923, and is blamed for damaging the credibility of democratic institutions, but the Nazis did not assume government until 1933, ten years after the hyperinflation but in the midst of high unemployment.




Unemployment is argued to be "beneficial" to the people who are not unemployed in the sense that it averts inflation, which itself has damaging effects, by providing (in Marxian terms) a reserve army of labour, that keeps wages in check.[107] However, the direct connection between full local employment and local inflation has been disputed by some due to the recent increase in international trade that supplies low-priced goods even while local employment rates rise to full employment.[108]


Full employment cannot be achieved because workers would shirk, if they were not threatened with the possibility of unemployment.[109] The curve for the no-shirking condition (labeled NSC) goes to infinity at full employment as a result. The inflation-fighting benefits to the entire economy arising from a presumed optimum level of unemployment have been studied extensively.[110] The Shapiro–Stiglitz model suggests that wages are not bid down sufficiently to ever reach 0% unemployment.[111] This occurs because employers know that when wages decrease, workers will shirk and expend less effort. Employers avoid shirking by preventing wages from decreasing so low that workers give up and become unproductive. These higher wages perpetuate unemployment while the threat of unemployment reduces shirking.



Optimal unemployment has also been defended as an environmental tool to brake the constantly accelerated growth of the GDP to maintain levels sustainable in the context of resource constraints and environmental impacts.[112] However the tool of denying jobs to willing workers seems a blunt instrument for conserving resources and the environment—it reduces the consumption of the unemployed across the board, and only in the short term. Full employment of the unemployed workforce, all focused toward the goal of developing more environmentally efficient methods for production and consumption might provide a more significant and lasting cumulative environmental benefit and reduced resource consumption.[113]


Decline in work hours[edit]

As a result of productivity, the work week declined considerably during the 19th century.[115][116] By the 1920s in the U.S. the average work week was 49 hours, but the work week was reduced to 40 hours (after which overtime premium was applied) as part of the National Industrial Recovery Act of 1933. At the time of the Great Depression of the 1930s, it was believed that due to the enormous productivity gains due to electrification, mass production and agricultural mechanization, there was no need for a large number of previously employed workers.[20][117]

Controlling or reducing unemployment[edit]

United States Families on Relief (in 1,000's)[118]
1936 1937 1938 1939 1940 1941
Workers employed
WPA 1,995 2,227 1,932 2,911 1,971 1,638
CCC and NYA 712 801 643 793 877 919
Other federal work projects 554 663 452 488 468 681
Cases on public assistance
Social security programs 602 1,306 1,852 2,132 2,308 2,517
General relief 2,946 1,484 1,611 1,647 1,570 1,206
Total families helped 5,886 5,660 5,474 6,751 5,860 5,167
Unemployed workers (BLS) 9,030 7,700 10,390 9,480 8,120 5,560

Societies try a number of different measures to get as many people as possible into work, and various societies have experienced close to full employment for extended periods, particularly during the Post-World War II economic expansion. The United Kingdom in the 1950s and 1960s averaged 1.6% unemployment,[119] while in Australia the 1945 White Paper on Full Employment in Australia established a government policy of full employment, which lasted until the 1970s.[120]


Demand-side solutions[edit]


There are many ways to stimulate demand for goods and services. Increasing wages to the working class (those more likely to spend the increased funds on goods and services, rather than various types of savings, or commodity purchases) is one theory proposed. Increased wages are believed to be more effective in boosting demand for goods and services than central banking strategies that put the increased money supply mostly into the hands of wealthy persons and institutions. Monetarists suggest that increasing money supply in general will increase short-term demand. As for the long-term demand, the increased demand will be negated by inflation. A rise in fiscal expenditures is another strategy for boosting aggregate demand.





In the US, the unemployment insurance allowance is based solely on previous income (not time worked, family size, etc.) and usually compensates for one third of previous income. To qualify, people must reside in their respective state for at least a year and work. The system was established by the Social Security Act of 1935. Although 90% of citizens are covered by unemployment insurance, less than 40% apply for and receive benefits.[121] However, the number applying for and receiving benefits increases during recessions. For highly-seasonal industries, the system provides income to workers during the off-season, thus encouraging them to stay attached to the industry.

Tax decreases on high income earners (top 10%) are not correlated with employment growth, but tax decreases on lower-income earners (bottom 90%) are correlated with employment growth.[122]

According to classical economic theory, markets reach equilibrium where supply equals demand; everyone who wants to sell at the market price can. Those who do not want to sell at this price do not; in the labour market, this is classical unemployment. Monetary policy and fiscal policy can both be used to increase short-term growth in the economy, increasing the demand for labour and decreasing unemployment.

Supply-side solutions[edit]

However, the labor market is not 100% efficient, although it may be more efficient than the bureaucracy. Some argue that minimum wages and union activity keep wages from falling, which means too many people want to sell their labour at the going price but cannot. This assumes perfect competition exists in the labour market, specifically that no single entity is large enough to affect wage levels and that employees are similar in ability.






In 1547, a bill was passed that subjected vagrants to some of the more extreme provisions of the criminal law, namely two years servitude and branding with a "V" as the penalty for the first offense and death for the second.[125] During the reign of Henry VIII, as many as 72,000 people are estimated to have been executed.[126] In the 1576 Act each town was required to provide work for the unemployed.[127]

The Elizabethan Poor Law of 1601, one of the world's first government-sponsored welfare programs, made a clear distinction between those who were unable to work and those able-bodied people who refused employment.[128] Under the Poor Law systems of England and Wales, Scotland and Ireland a workhouse was a place where people who were unable to support themselves, could go to live and work.[129]

Industrial Revolution to late 19th century[edit]

The Depression of 1873–79: New York City police violently attacking unemployed workers in Tompkins Square Park, Manhattan, New York City 1874


— Jackson J. Spielvogel (2008), Western Civilization: Since 1500., Cengage Learning. p.566. ISBN 0-495-50287-1





Scarcity of labor was a factor in the economics of slavery in the United States.



20th century[edit]

Unemployed Canadian men, marching for jobs during the Great Depression to Bathurst Street United Church, Toronto, Ontario in Canada, 1930

There were labor shortages during World War I.[20] Ford Motor Co. doubled wages to reduce turnover. After 1925, unemployment gradually began to rise.[133]

The 1930s saw the Great Depression impact unemployment across the globe. One Soviet trading corporation in New York averaged 350 applications a day from Americans seeking jobs in the Soviet Union.[134] In Germany, the unemployment rate reached nearly 25% in 1932.[135]

In some towns and cities in the northeast of England, unemployment reached as high as 70%; the national unemployment level peaked at more than 22% in 1932.[136] Unemployment in Canada reached 27% at the depth of the Depression in 1933.[137] In 1929, the U.S. unemployment rate averaged 3%.[138]

WPA poster promoting the benefits of employment

In the US, the Works Progress Administration (1935–43) was the largest make-work program. It hired men (and some women) off the relief roles ("dole") typically for unskilled labor.[139]

In Cleveland, Ohio, the unemployment rate was 60%; in Toledo, Ohio, 80%.[140] There were two million homeless people migrating across the United States.[140] Over 3 million unemployed young men were taken out of the cities and placed into more than 2600 work camps managed by the Civilian Conservation Corps.[141]


Fredrick Mills found that in the US, 51% of the decline in work hours was due to the fall in production and 49% was from increased productivity.[142]

By 1972, unemployment in the United Kingdom had crept back up above 1,000,000, and was even higher by the end of the decade, with inflation also being high. Although the monetarist economic policies of Margaret Thatcher's Conservative government saw inflation reduced after 1979, unemployment soared in the early 1980s, exceeding 3,000,000, a level not seen for some 50 years, by 1982. Thiat represented one in eight of the workforce, with unemployment exceeding 20% in some parts of the United Kingdom that had relied on-declining industries such as coal mining.[143]

However, that was a time of high unemployment in all major industrialised nations.[144] By the spring of 1983, unemployment in the United Kingdom had risen by 6% in the previous 12 months; compared to 10% in Japan, 23% in the United States of America and 34% in West Germany (seven years before reunification).[145]

Unemployment in the United Kingdom remained above 3,000,000 until the spring of 1987, when the economy was enjoying a boom.[143] By the end of 1989, unemployment had fallen to 1,600,000. However, inflation had reached 7.8% and the following year it reached a nine-year high of 9.5%; leading to increased interest rates.[146]

Another recession began in 1990 and lasted until 1992. Unemployment began to increase and by the end of 1992, nearly 3,000,000 in the United Kingdom were unemployed, which was then overturned shortly after a strong economic recovery.[143] With inflation down to 1.6% by 1993, unemployment then began to fall rapidly, standing at 1,800,000 by early 1997.[147]

21st century[edit]

The Japanese unemployment rate, 1953–2006.

The official unemployment rate in the 16 EU countries that use the Euro rose to 10% in December 2009 as a result of another recession.[148] Latvia had the highest unemployment rate in the EU at 22.3% for November 2009.[149] Europe's young workers have been especially hard hit.[150] In November 2009, the unemployment rate in the EU27 for those aged 15–24 was 18.3%. For those under 25, the unemployment rate in Spain was 43.8%.[151] Unemployment has risen in two thirds of European countries since 2010.[152]

Into the 21st century, unemployment in the United Kingdom remained low and the economy remaining strong, and several other European economies, (France and Germany) experienced a minor recession and a substantial rise in unemployment.[153]

In 2008, when the recession brought on another increase in the United Kingdom, after 15 years of economic growth and no major rises in unemployment.[154] Early in 2009, unemployment passed the 2,000,000 mark, and economists were predicting it would soon reach 3,000,000.[155] However, the end of the recession was declared in January 2010[156] and unemployment peaked at nearly 2,700,000 in 2011,[157] appearing to ease fears of unemployment reaching 3,000,000.[158] The unemployment rate of Britain's young black people was 47.4% in 2011.[159] 2013/2014 has seen the employment rate increase from 1,935,836 to 2,173,012 as supported by[160] showing the UK is creating more job opportunities and forecasts the rate of increase in 2014/2015 will be another 7.2%.[161]

A 26 April 2005 Asia Times article noted, "In regional giant South Africa, some 300,000 textile workers have lost their jobs in the past two years due to the influx of Chinese goods".[162] The increasing US trade deficit with China cost 2.4 million American jobs between 2001-2008, according to a study by the Economic Policy Institute (EPI).[163] From 2000-2007, the United States lost a total of 3.2 million manufacturing jobs.[164] 12.1% of US military veterans who had served after the September 11 attacks in 2001 were unemployed as of 2011; 29.1% of male veterans aged 18–24 were unemployed.[84] As of September 2016, the total veteran unemployment rate was 4.3 percent. By September 2017, that figure had dropped to 3 percent.[165]

About 25,000,000 people in the world's 30 richest countries lost their jobs between the end of 2007 and the end of 2010 as the economic downturn pushed most countries into recession.[166] In April 2010, the U.S. unemployment rate was 9.9%, but the government's broader U-6 unemployment rate was 17.1%.[167] In April 2012, the unemployment rate was 4.6% in Japan.[168] In a 2012 story, the Financial Post reported, "Nearly 75 million youth are unemployed around the world, an increase of more than 4 million since 2007. In the European Union, where a debt crisis followed the financial crisis, the youth unemployment rate rose to 18% last year from 12.5% in 2007, the ILO report shows."[169] In March 2018, according to US Unemployment Rate Statistics, the unemployment rate was 4.1%, below the 4.5-5.0% norm.[170]

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External links[edit]

Quotations related to unemployment at Wikiquote The dictionary definition of unemployment at Wiktionary