June 24, 2024 

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LAW OF DIMINISHING MARGINAL UTILITY: The principle stating that as more of a good is consumed, eventually each additional unit of the good provides less additional utility--that is, marginal utility decreases. Each subsequent unit of a good is valued less than the previous one. The law of diminishing marginal utility helps explain the negative slope of the demand curve and the law of demand.

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People who are actively engaged in the production of goods and services. This is one of three official categories used to classify individuals by the Bureau of Labor Statistics (BLS) based on information obtained from the Current Population Survey. The other two categories are unemployed persons and not in the labor force. The sum of employed persons and unemployed persons constitutes the civilian labor force.
While most employed persons are people who receive payment for performing productive work, usually for profit-seeking business firms, the Bureau of Labor Statistics (BLS) has four specific criteria designed to capture the range of employment possibilities.

Four Criteria

The BLS places people in the employed persons category if they satisfy any of four criteria during the reference week established for the Current Population Survey: (1) worked as paid employees, (2) worked in their own business with or without pay, (3) worked 15 hours or more a week in a family business, or (4) was temporarily absent from a regular job due to illness, vacation, or similar circumstance.

  • Paid Employee: The criterion capturing the vast majority of employed persons is working as a paid employee, usually for a profiting-seeking business. While profit-seeking businesses are the prime employer, an employed person could be a paid employee of government (excluding military personnel), a not-for-profit charity, or even a household (for example, working as a domestic servant).

  • Work in Self-Owned Business: People can also be considered employed if they work in their own businesses (either proprietorships or a partnerships) whether or not they receive any explicit wage or salary payment for their labor services. Employee wage payments in owner-operated businesses are commonly bundled together with other factor payments and simply treated as "profit" (what is officially termed proprietors' income). For the BLS, the explicit payment is secondary to the fact that these people are engaged in productivity activity.

  • Work 15+ Hours in Family-Owned Business: Using similar reasoning, the BLS also considers people who work in family-operated businesses as being employed, even though they received no explicit wage or salary payment, as long as they work at least 15 hours during the reference week. The 15-hour cut off excludes family members that "just sort of help out a little," while including those who devote significant labor effort to the operation of the business.

  • Temporarily Absent from Job: During a given reference week, about 5 percent of the nation's employed workers might fail the other three criteria only because they just happened to be temporarily off work THAT week. The permissible reasons for being out of work temporarily during a given week, but not considered unemployed are: vacation, illness, bad weather, labor dispute, child-care problems, maternity or paternity leave, or other family or personal obligations. In these cases the people are normally employed, they have jobs, they just did not happen to be working at their jobs during the reference week.

Four Examples

The robust economy of Shady Valley provides examples of employed persons that satisfy each of the official criteria.
  • Preston Pumpernickel, Paid Employee: Preston Pumpernickel is gainfully employed as a computer programmer at the Quadra DG Computer Works. Like millions of others, Preston fits the BLS criterion of a paid employee. He performs productive work for Quadra DG Computer Works, then receives a paycheck each month. Preston is an employed person.

  • Peter Pickering, Proprietor: Peter Pickering owns and operates his own pumpkin growing business. Peter supplies the labor, capital, land, and entrepreneurship. He deducts operating expenses from his sales revenue to determine his "profit" or proprietor's income, but he does NOT pay himself an explicit wage for his labor services. However, he does work. Peter is engaged in a productive activity. Peter fits the BLS criterion of someone who works in his own business and that makes Peter an employed person.

  • Patti Poston, Family Worker: Patti Poston's family owns and operates a pet-grooming business. The grooming work is primarily performed by Patti's father Frank and her mother Martha. Patti's brother Benji tends to the books. Patti spends most of her time taking classes at the Ambling Institute of Technology pursuing a doctorate degree in veterinary medicine. However, she also helps out three or four days a week around the family business clipping toenails and the like. However, she is not paid for her productive services. Patti falls within the BLS unpaid worker in a family business criterion and she is an employed person.

  • Pamela Pippin, Pregnant Postal Worker: Pamela Pippin is a long-time employee of the U.S. Postal Service. Through rain, snow, sleet, and hail, Pamela has always managed to make her appointed rounds. However, she happened to pick the BLS reference week to give birth to a baby girl (Pauline Pippin, 7 pounds, 6 ounces, 19 inches). While Pamela was not actively engaged in productive postal work during the BLS reference week, she did fall into the BLS temporarily absent from work category. Pamela is an employed person.


Recommended Citation:

EMPLOYED PERSONS, AmosWEB Encyclonomic WEB*pedia,, AmosWEB LLC, 2000-2024. [Accessed: June 24, 2024].

Check Out These Related Terms...

     | unemployed persons | not in the labor force | discouraged workers | marginally-attached workers | part-time workers | unemployment rate, measurement problems | Current Population Survey | Bureau of Labor Statistics | labor force | civilian labor force | employment rate | employment-population ratio | labor force participation rate |

Or For A Little Background...

     | unemployment | unemployment rate | unemployment sources | macroeconomic problems | macroeconomic goals | factors of production | full employment | business cycles | contraction | expansion |

And For Further Study...

     | natural unemployment | unemployment problems | unemployment reasons | unemployment, production possibilities | full employment, production possibilities | macroeconomic sectors | gross domestic product | macroeconomic markets | resource markets | inflation | stabilization policies | government functions | underground economy | business cycle indicators |

Related Websites (Will Open in New Window)...

     | Bureau of Labor Statistics | Current Population Survey Home Page |

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