Question

1. Peyton Manning has retired from the NFL. He has a lot of money in the bank and is independently wealthy. Is Peyton in the labor force?

2. Say he works as a TV commentator during football season. How does his lack of work impact unemployment rate during the off season.

3. What would happen if Manning's TV contract is cancelled and he stops looking for work. How would that impact the unemployment rate?

Answer 1

1) Labour force consists of the emoloyed and unemployed people who are actively looking for work.

So a person who has retired and irrespective of how much money he has he will not be a part of labor force. So Peyton Manning is not a part of labor force.

2) If he is a TV commentator during football season , then during the off season his lack of work will make him being counted as an unemployed because he is jobless in the off season and will be ready to work if he gets and would therefore increase the number of unemployed people in the labor force. Hence, this will increase the unemployment rate in the off season.

3) People who are unemployed but are actively looking for work are counted in the labor force. But people who are unemployed and have also stopped looking for work will not be counted in the labor force.

Unemployment rate = Number of people unemployed/ Total labour force

So when an emplyed person stops looking for work , he is no longer counted in the labor force and hence this will decrease the unemployment rate.