Economists examine four kinds of unemployment. Frictional unemployment occurs when people are in between jobs or returning to the work force after a period of not working. Seasonal unemployment occurs in industries that slow or shut down for a particular time of the year, such as after a harvest or a busy holiday season. Structural unemployment happens when workers’ skills do not match the jobs that are available. For example, new technology may cost jobs in industries that rely on older ways of producing goods. Cyclical unemployment occurs during recessions, when the demand for goods and services drops. The resulting slowdown in production causes the demand for labor to drop, and companies lay off employees.

     The amount of unemployment is an important clue to the health of the nation’s economy. The federal government tracks the unemployment rate, or the percentage of the nation’s labor force that is unemployed. To determine the unemployment rate, the Bureau of Labor Statistics polls a large sample of the population every month.

     Since frictional, seasonal, and structural employment occur even in an economy that is working properly, economists expect some unemployment. An unemployment rate of 4 to 6 percent is considered full employment, the level of employment reached when there is no cyclical unemployment. However, some people with jobs are underemployed, meaning that they work part time when they want full-time jobs, or work at jobs that are below their skills.