Economists love the notion of “frictional unemployment.” Some may go as far as to say that all unemployment is frictional – meaning a mismatch in the supply land demand for labor.
One definition (courtesy of BusinessDictionary.com) describes frictional unemployment as follows: “Temporary unemployment arising out of the inevitable time lags in the functioning of labor markets, such as the time taken in moving from one job to another.”
Said another way, if you are out of work and looking for a new job, an economist might classify you as unemployed due to the “friction” in the economy.
Here’s an example: if you worked for an automobile manufacturer in Michigan, and your job was replaced by a worker at a facility in Korea, your unemployment could be considered frictional, as you would be looking for another opportunity to work with the skills you have or learn additional skills that would allow you to pursue a different type of job.
While logically sound, I have trouble the idea of frictional unemployment because it is too theoretical. It is easy for an economist to pontificate about the state of unemployment, but it is much more difficult when you are a personal victim of the “friction.”
Take a look at the short video below by Latoya Egwuekwe. It is an excellent compilation of county-level unemployment data over the course of the recession. [Note: There is no audio.]
There are currently over 15 million people unemployed. When you take into account everyone else who is underemployed, involuntarily working part-time, or who have given up looking for work, the number jumps to over 30 million!
One of the first things you need to do is to sign up for unemployment benefits.
At any given time, millions of people are out of work. But, believe it or not, less than half of Americans who are unemployed actually receive unemployment benefits!
Typically, unemployment benefits last for a maximum of 26 weeks. With the recent state and federal programs and subsidies, however, you can now get up to 99 weeks of unemployment compensation. At over $450 per week in some states, this amounts to nearly $45,000 of money from the government while you are searching for a job.
Applying for unemployment benefits is a relatively straightforward process, and can be accomplished online or over the phone.
Once you have decided to sign up for unemployment benefits, the next step is to determine your unemployment eligibility.
Here’s what President Obama had to say about unemployment and jobs in his State of the Union speech:
Unemployment
Bailing Out The Banks. He said that if the government had not gotten involved during the financial crisis, there is a chance that unemployment might be twice what it is today.
Extensions. The President mentioned the unemployment extension. During the past year, unemployment insurance was “extended or increased” for more than 18 million Americans.
2 Million Jobs. Because of the Recovery Act, over 2 million people who otherwise would have been out of work still have their jobs. These include police officers, teachers, prison workers, and fire fighters.
Jobs
New Jobs. The one specific area of jobs mentioned was clean energy jobs.
Full Employment. “The only way to move to full employment is to lay a new foundation for long-term economic growth.”
Financial Reform. By requiring banks to lend to small businesses, President Obama believes that these companies will be able to operate with enough financial stability to retain current employees, raise wages, and hire new workers.
Encouraging Innovation. The area of focus here was again clean energy. New technology drives economic growth, and economic growth will lead to new jobs.
Investing in People. President Obama referred to education. He proposed a $10,000 tax credit for four years of college, increasing Pell Grants, and forgiving loans on student debt.
Were you recently laid off? 