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Rocky Mountain Low
In addition to estimating the unemployment rate 7.2% in July 2007. And this high unemployment One thing you should know, however, is
for the nation as a whole, the U.S. government rate did indeed correspond to a very poor labor that differences in state unemployment rates
also estimates unemployment rates for each market. A poll taken by the Detroit Free Press in don’t tend to persist, in large part because,
state. These state unemployment rates often early 2007 found that 3 out of every 10 young as that Michigan poll suggested, Americans
differ considerably—and the differences corre- Michigan residents were considering leaving tend to move to where the jobs are. As recently
spond to real differences in the condition of the state, including almost half of poor job as 2000, Michigan had an unemployment
local labor markets. The figure shows how un- prospects. These state- to - state comparisons rate of only 3.7%, well below the national
employment rates varied across the United show that the unemployment rate is indeed a average of 4.0%, while Montana had an
States in July 2007. good indicator of how easy or hard it is to find unemployment rate of 4.8%, above the na-
As you can see from the figure, Montana a job. tional average.
had one of the lowest unemployment rates
in the United States, only 2.7% in July Montana
2007, mainly because the state’s boom- Michigan
ing oil business was creating new jobs
even as the state’s aging population re-
duced the size of the labor force. And this
low unemployment rate created a seller’s
market in labor. According to the Associ-
ated Press, the owner of the McDonald’s
franchise in Sidney, Montana, desperate
to find workers, “tried advertising in the
local newspaper and even offered up to
$10 an hour to compete with higher -
paying oil field jobs. Yet the only calls
were from other business owners upset
they would have to raise wages, too.”
Michigan was at the opposite ex-
7.0% to 9.9% 4.0% to 4.9%
treme. Layoffs by auto manufacturers,
6.0% to 6.9% 3.0% to 3.9%
the traditional mainstay of Michigan’s
5.0% to 5.9% 2.0% to 2.9%
economy, had given the state the high-
est unemployment rate in the nation:

Module 12 AP Review
Solutions appear at the back of the book.

Check Your Understanding
1. Suppose that employment websites enable job -seekers to find a. Rosa, an older worker, has been laid off and gave up looking
suitable jobs more quickly. What effect will this have on the for work months ago.
unemployment rate over time? Also suppose that these b. Anthony, a schoolteacher, is not working during his
websites encourage job -seekers who had given up their searches three-month summer break.
to begin looking again. What effect will this have on the c. Grace, an investment banker, has been laid off and is
unemployment rate? currently searching for another position.
d. Sergio, a classically trained musician, can only find work
2. In which of the following cases would the worker be counted as
playing for local parties.
unemployed? Explain.
124 section 3 Measurement of Economic Performance