ABSTRACT
The unemployment rate cited in the newspapers and on television understates the problem in at least two ways. First, a person is considered employed even if they work only one hour a week and second is that many people cannot find jobs for a long time, so they are very discouraged and stop looking for job. The chapter discusses how the unemployment rate is related to individual human misery. Inequality is defined in terms of the relationship of the income of one group versus another. During the expansion, production rises, so employment rises. Therefore, the unemployment rate eventually goes down. During contractions, the unemployment rate rises as more and more people lose their jobs. The excess of available labor causes wages and salaries to fall. Inequality under our present economic system is affected by the business cycle; moreover, inequality is a major cause of the business cycle.
