Macroeconomics Chapter 3

The natural rate of unemployment is between 4.5 percent and 5.0 percent, according to the Federal Reserve. 

The Bureau of Labor Statistics defines unemployed people as those who are jobless and have actively looked for work in the past four weeks. If they don't keep looking, the BLS doesn't count them in the labor force.

Four Causes of Frictional Unemployment

One reason for unemployment is voluntary. Some of the unemployed have saved enough money so they can quit unfulfilling jobs. They have the luxury to search until they find just the right opportunity.

The second cause is when workers must move for unrelated reasons. They are unemployed until they find a position in the new town.

The third reason is when new workers enter the workforce. That includes students who graduate from high school, college or any higher degree program. They look for a job that fits their new skills and qualifications.

That's a primary reason for youth unemployment.

The fourth reason is when job seekers re-enter the workforce. These are people who went through a period in their lives when they stopped looking for work. They could have stopped working to raise children, get married or care for elderly relatives.

These four situations are an unavoidable part of the job search process.