[MUSIC] So what technically is this unemployment rate? And how is it measured? Statistics on unemployment and the labor force are among the most carefully designed and comprehensive economic data the United States collects. The data are gathered monthly in a procedure known as random sampling of the population. Each month, about 60,000 households are interviewed about their recent work history. The survey divides the population 16 years and older into the following groups. People without jobs, who are not looking for work are categorized as not in the labor force. This includes homemakers, students, retirees, voluntarily idle and the non-working disabled. This category also includes all persons incapable of working, such as inmates in institutions and people under 16 years of age. People with jobs are categorized as employed. People without jobs who are looking for work are said to be unemployed. And the labor force is simply equal to people who are employed plus people who are not employed. The unemployment rate then is simply the number of unemployed divided by the labor force times 100. For example, if the total unemployed is 8 million and the labor force stands at 130 million. What's the unemployment rate? The answer of course is 6.2%. This is simply 8 million divided by 130 million which equals 0.062 and this times 100 equals 6.2%. This figure shows the unemployment rate by race, gender, and age, as well as by education. You can see that the unemployment rate steadily falls as education increases, high school drop outs suffering the highest rate of unemployment. You can also see that teenagers generally have the highest unemployment rate of any demographic group while black teenagers have experienced unemployment rates between 30 and 50%. Is this unemployment frictional, structural or cyclical? Recent evidence indicates that, particularly for whites, teenage unemployment has a large frictional component. Teenagers move in and out of the labor force very frequently. They get jobs quickly and change jobs often. Moreover, in most years half the unemployed teenagers are new entrants who have never had a paying job before. All these factors suggest that teenage unemployment is largely frictional. That is, it represents the job search and turnover necessary for young people to discover their personal skills and to learn what working is all about. What about black teenagers? As you can see from the table, this group has by far the highest unemployment rate. One possible reason is racial discrimination. Another theory holds that a high minimum wage tends to drive low-productivity black teenagers into unemployment. Still another theory advanced by some conservative critics of the modern welfare state, blame high unemployment of blacks on the culture of dependency that is nurtured by government welfare to the poor. Unfortunately, there is insufficient empirical data to resolve the issue, and the controversy over black teen unemployment is ongoing.