Type of paper: Essay

Topic: Workplace, Employment, Unemployment, Social Issues, Labor, Labor Force, Force, Employee

Pages: 3

Words: 825

Published: 2021/02/13

Overview of Employment

The term “Employment" is considered in numerous meanings by different people that broadly describes the job that may be in the organization, community or self-employment. This essay delineates on different components of employment, terminologies and so forth in the context of economics that can be addressed under "employment".
The employee shows his consent to the agreement that he has to sign while accepting a job offer. It is compulsory for both employer and employee to agree to components of employment while making contract because employment components are the key elements of the employment contract. These components are work conditions, dispute resolution and more importantly rights and responsibilities of employee and employer. Two of these components of employment are discussed below.
Dispute resolution is the most important component of employment. For dispute resolution organization selects an arbitrator who is usually a legal advisor having experience in resolving disputes arising between employees and management. According to the "equal employment,- opportunity commission", the federal laws are present regarding many disputes such as civil rights and discrimination complaints at work. Hence, the employer has to follow laws in case of disputes concerning these issues and is not authorize to impose his arbitration. Provision of arbitration is a vital responsibility of hotels, retail stores, restaurants and many other organizations (Layard, Nickell & Jackman, 2005).
Setting payments terms is also an important part of employment components. The employer is bound to pay employees at least minimum wages set by federal government. So employee must be paid for each hour spent in the workplace. Hence, before accepting job offer employer and employee set payment terms that how many employers would pay to the employee and whether this payment is acceptable to the employee. Payment component also includes additional incentives offered to the employee when he performs additional duties (Vuletin, 2008).
The labor force of any organization is considered as labor pool in employment. The Labor force in the specific term is considered for those people who are working for any company or industry. But in general term those people who work for any city, state or country are also considered as a labor force. The Labor force encompass both employed and unemployed people. Those people who are working in any firm or whether they are seeking for job or employees are termed as labor force by economists (Kitov, 2007).
Not in Labor Force is any person who is not classified as labor force by the Bureau of Labor Statistics (BLS), either person is employed or unemployed. In this classification, all the strata of the population are included such as young, elders, housewives and military personnel. This also includes those under its shadow that are unable or unwilling to involve in any productive activity due to some reasons. BLS calculates the number of persons not in labor force members along with employed and labor force members on the monthly basis. Civilian labor force specification includes the combination of both employed and unemployed persons. This eventually tells that anyone who does not come under civilian. Labor force classification is categorized as “Not in the labor force” (Hoehn, 2007).Some of them are excluded from these categories depending on their demographics and decisions that they make (Clogg, Eliason & Leicht, 2001).
Unemployment is classified into three categories by economists. These types are structural, frictional and seasonal unemployment. Brief description of all of these types is as:

Glossary of economic terms defines structural employment as “when there is no demand of available workers in the market then it is termed as structural employment” (Franz, 1992, p.1).Structural employment occurs due to two major reasons. When there is a change in technology, then it occurs. For instance, with the introduction of computers in the organizations demand for the typewriters was reduced, and experienced typewriters became unemployed. Another major reason is associated with a change in taste of people. For example with the introduction of Smartphones demand for feature phones reduced and companies who are making feature phones will lose their position and majority of their employees will face unemployment.

Frictional Unemployment

“When people are moving to job, career and location the frictional unemployment occurs” opined by economists (Hughes & Perlman, 2015, p. 26-27). There are several sources that create frictional unemployment:
1. Workforce entry from schools,
2. Re-entering in labor force after raising children,
3. People become unemployed because of quitting or being fired from their job due to some reason,
4. Change in career due to change in interest,
5. Unemployment due to movement from one place to other.

Cyclical Unemployment

According to McCollen and Brue, in Macroeconomics “when the unemployment rate is moving in opposite direction to GDP growth rate then it is termed as cyclic unemployment. According to this criterion unemployment, would be high when GDP growth rate is small” (Pedersen & Lund, 2007, p. 99).
The minimum possible unemployment rate sustained by the economy over the long run is termed as a natural rate of unemployment. According to the Keynesian point of view, maintaining the natural rate of employment is possible with the acceptance of a higher level of inflation by the government and this idea is supported by Philips Curve. Whilst this idea was criticized by the several economist with a view that unemployment has a tendency to bounce back however inflation would stay high. Thus consensus was achieved on the point that the natural rate of unemployment is termed "the lowest rate of unemployment" under stable inflation (Snower & Dehesa, 2007).
The Labor force in simple words is those people who are willing and able to work. So to calculate the labor force size, the unemployment rate is calculated.
Unemployment Rate = (number of unemployed / labor force)* 100
In short, last but not the least, according to some critics, the unemployment rate is not perfect indicator or measure of unemployment rate calculation. Criticism is based upon three areas. Survey conducted to measure number of unemployed may not accurate. For example, if a survey is conducted on the phone then it would not include those who do not have phones. Sometimes people feel it embarrassing to admit that they do not have any job that could motivate them to lie. This could also create inaccuracy in the survey. Another problem in the calculation of unemployment rate is the inclusion of only those who are looking for work. This excludes those who have given up job finding but are willing to work if provided the opportunity (Welch & Welch, 2012).


Clogg, C., Eliason, S., & Leicht, K. (2001). Analyzing the labor force. New York: Kluwer Academic/Plenum Publishers.
Hoehn, A. (2007). A new division of labor (pp. 27-51). Santa Monica, CA: RAND.
Hughes, J., & Perlman, R. (2015). The Economics of Unemployment: A Comparative Analysis of Britain and the USA (pp. 26-27). Cambridge: Cambridge University Press.
Kitov, I. (2007). Inflation, Unemployment, Labor Force Change in the USA. SSRN Journal. Retrieved from http://mpra.ub.uni-muenchen.de/14557/1/MPRA_paper_14557.pdf
Layard, R., Nickell, S., & Jackman, R. (2005). Unemployment (2nd ed.). Oxford [England]: Oxford University Press.
Pedersen, P., & Lund, R. (2007). Unemployment (pp. 99). (4th ed.). Berlin: W. de Gruyter.
Snower, D., & Dehesa, G. (2007). Unemployment policy (2nd ed.). Cambridge: Cambridge University Press.
Vuletin, G. (2008). Measuring the Informal Economy in Latin America and the Caribbean. IMF Working Papers, 08(102), 1.
Welch, P., & Welch, G. (2012). Economics, theory & practice (10th ed.). Chicago: Dryden Press.

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