Sharpe, Andrew. “The Canada-U.S. Unemployment
Rate Gap: An Assessment of Possible Causes.”
Research Paper R-96-15E.a. Ottawa: Human Re-
sources Development Canada, Strategic Policy,
Applied Research Branch, 1996.
Jan Hall
See also Business and the economy in Canada;
Business and the economy in the United States; Can-
ada and the United States; Demographics of Can-
ada; Demographics of the United States; Inflation in
Canada; Inflation in the United States; Recessions;
Unemployment in the United States.
Unemployment in the United
States
Definition The proportion of the U.S. labor force
that is both without work and seeking
work
Persistently high and growing unemployment
in the early 1980’s created anxiety regarding
the health of the U.S. economy.
As an economic indicator, the unemploy-
ment rate is used to gauge the state of the
economy and to guide economic policy.
When the unemployment rate during the
early part of the 1980’s reached its highest
level since the 1930’s (the years that in-
cluded the Great Depression), many saw
this high unemployment as evidence that
the economy was in decline. Viewed from
a longer perspective, though, the high
unemployment rate in the early 1980’s,
followed by its steady decline to much
lower levels at the end of the decade,
seems to indicate that the national econ-
omy was adjusting to globalization.
The official U.S. unemployment rate is
compiled monthly by the Bureau of La-
bor Statistics, which is part of the U.S. De-
partment of Labor. Based on a random
sample of households, the unemployment
rate estimates the percentage of individu-
als in the labor force without a job. To be
considered part of the labor force, an in-
dividual must be sixteen years old or older
and either have a job or be actively seek-
ing one. Those without a job who are not looking for
one are not considered to be unemployed, because
they are not part of the labor force.Types of Unemployment In order to understand
what caused changes in the unemployment rate dur-
ing the 1980’s, it is useful to divide unemployment
into three categories. Frictional unemployment re-
sults when people who are qualified for available
jobs have not yet secured a position. Structural un-
employment results when people are unqualified
for the jobs available. Cyclical unemployment results
when too few jobs are available because the economy
is not strong enough to support its entire labor
force. The unemployment rate will change if there is
a change in any one of these three type of unemploy-
ment.
Changes in the unemployment rate during the
1980’s resulted from changes in both structural andThe Eighties in America Unemployment in the United States 999
President Ronald Reagan’s son, Ronald Reagan, Jr., stands in line to collect
unemployment benefits on October 14, 1982.(AP/Wide World Photos)