Unemployment in America
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In the modern world, people rely mostly on money to satisfy their wants and needs. Money does not grow on trees. People have to work to get it. It got established that currency best remains of some rarity within a country. But being unemployed is more than just a money problem. As millions of people strive to make as much money as they can and raise their living standards, the competition is evident. Some would say being caught up in the rat race between bills and salary is terrible enough until they experience the harsh reality of unemployment. Being jobless is a significant stumbling block in the dreams of many individuals. A cause of all sought of discomfort and trouble. This paper will highlight the realities of unemployment in the U.S. it will discuss the history, origins, and aftermath of unemployment on the individuals and population at large.
The United States of America is one of the most significant modern countries in business and science alike. The nation has gotten known as the land of opportunities by many people across the world. Yet this phrase would easily pass as an oxymoron to the ears of unemployed citizens in the country. To get the unemployment statistics, the government prepares a monthly employment report through the Bureau of Labor Statistics (BLS). The report entails the unemployment rate. A figure used to get a picture of the nation’s economic strength. Other related issues, such as satisfaction or dissatisfaction in the country’s government and leadership, also get addressed in the report. As is the nature of statistics, the unemployment rate keeps on fluctuating year after year. One of the steepest fluctuations got seen in the 2008 and 2009 recess, which mounted unemployment from 4.7 percent to 10.1 percent. This recess got caused by the housing bubble burst, accompanied by wall street saw falling (Solomon, 2008).
The government officially started keeping track of unemployment in the 1950s. However, estimates of previous unemployment statistics are not entirely unknown. The nation still recalls the great depression in the 1930s, which brought unemployment to an all-time high of 23.6 percent (Solomon, O. H. (2008). The great depression got believed to have occurred as a result of the stock market crash, the gold standard, and a decline in spending, among others. Shortly after this period, the country went to war. World war II in 1944 saw the lowest unemployment rate in the history of America as millions of men got called to join the army. The rate of unemployment in this period reached an astonishing 1.2 percent the lowest ever recorded. Since then, only the 1953 statistic has come close to the record, reaching 2.9 percent. By 2018 the American economy had experienced 11 recessions that have left bitter memories in the minds of hardworking citizens.
The causes and solutions to unemployment have long been a spark for debate. The conflicting social and political ideologies in America make it difficult to reach a consensus. The line got drawn along the types of unemployment, which seem to be generally accepted. Types of unemployment exist in three main types: frictional unemployment, cyclical unemployment, and structural unemployment. Frictional unemployment is ever-present among the citizens of a country. It occurs as a result of various factors that affect individuals directly and indirectly. For some, it is their choices and preferences that render them unemployed. People leave work in one field and go to another, which better fits their personality and talents. Job pressure is a reality in many carriers, and people prefer to be doing what they enjoy (Redding, 2010). Others want to make more money, so they take risks that do not always pay off.
Frictional unemployment may also occur as a result of the new labor force in the market. Each year sees the graduation of college and university students in the workforce. These hardworking scholars expect to find jobs that will enable them to succeed in life. Sadly, they see the real world as different from textbooks and have to learn it over again. Companies get the daunting task of weighing good grades against experience. While both have their advantages and difficulties, it is natural for newcomers to join at the back of the queue. Family ties may bring about some frictional unemployment as many go with their families when they move. When families relocate, some members who have jobs in that area will lose them if moving too far away. Great distances raise the cost of transport and make it harder to be at work on time. Some employers refuse to hire workers for reasons unrelated to economic events. Discrimination amongst certain groups is one of the most painful causes of unemployment (Dunn, 2012).
The second type of unemployment is structural unemployment. Advancements in technology are some of the reasons for this form of unemployment. For instance, when the internet revolutionized the media, many reporters lost their jobs. As websites become more prevalent in advertising, newspapers had reduced their staff load to cope with the changing income. Many industries have undergone technological changes that demand less human labor, leaving many without jobs. Structural unemployment may also occur due to a lack of skills or a lack of skilled based jobs. In an economy where people have skills and knowledge, they require to do useful work, but there is no open position unemployment occurs. On the flip side, some economies require skilled labor and have many open positions, but the population is unskilled. Outsourcing may present a solution to this problem. However, companies have been more focused on increasing profits, making them seek cheap labor and in low wage countries. Lower costs attract companies away from local work as they aim to increase profit margins.
Cyclical unemployment unwinds like a thread. It begins when the demand for goods and services reduces in the general economy. Such a reduction in order reflects on sales, which start to sink and reduce company income. The firms get forced to reduce their staff to survive the recess. The Keynesian theory of economics describes it as the natural effects of burst and boom cycles in business. The workers who get laid off during such a period experience reduction in income and lose their purchasing power. When more people are unable to buy goods and services, the overall demand in the economy decreases, leading to more sales decline. Other companies have to let go of more employees who will also experience loss of purchasing power. The spiral continues to destroy the economy unless there is an external intervention. The government must come to save the marketplace by introducing employment creating measures (Redding, 2010).
In the U.S, whenever the rate of unemployment rises above 6 percent, the government’s federal agency intervenes to sought out the issue. The situation is more alarming if unemployment is spread across many industries and threatens long-term effects. A cyclical type of unemployment is most destructive to a nation. The federal government uses two significant approaches to try and defeat the cycle. These measures to control unemployment include monetary policy and fiscal policy. The strategies get implemented through the independent central bank. This bank controls the other banks in the economy and may raise or lower interest rates. In the case of a recess, the government may lower interest rates to encourage banks to invest in businesses. When business gets more money, they expand creating jobs. Another way is to increase the circulation of funds through buying and selling treasury bills and bonds. The fiscal policy includes reducing the costs of business in the economy. The government may cut taxes, increase expenditure in specific industries, provide infrastructure, and even offer benefits to help unemployed workers.
Unemployment causes serious trouble in the lives of many individuals. The issues that erupt from unemployment touch every aspect of adult life. People experience psychological, health, and even marital problems due to unemployment. A job gives a person a place in society; being able to pay bills makes life better. Without a job, people lose their social standards as their property slowly fades off. Society treats you differently when you have no income. As a result, some people fall into depression become violent and are more likely to commit crimes. As unemployment increases, crime also increases, making it unsafe for everyone.
Moreover, unemployment, such as cyclical unemployment, leads to more unemployment causing the general population to suffer. When an individual commits suicide because of stress from unemployment, he leaves behind a traumatized society. Suicide can be contagious and is known to reoccur in families with such history (Dunn, 2012). The government also suffers when there is high unemployment, as fewer taxes will be collected. Such a situation may force the government to borrow more. When industries collapse due to cyclical unemployment, there is an inefficient use of human resources, causing loss of human capital.
In conclusion, unemployment is a significant threat to the wellbeing of the individual and nation at large. The American economy has many hardships, which caused high unemployment rates. The many recessions experienced by the country have enabled it to adapt wise measures that counter unemployment. The contributions of the central bank through monetary and fiscal measures, help to create employment. When there is high unemployment, the entire nation suffers.
References
Helpman, E., Itskhoki, O., & Redding, S. (2010). Inequality and unemployment in a global economy. Econometrica, 78(4), 1239-1283.
Dell’Anno, R., & Solomon, O. H. (2008). Shadow economy and unemployment rate in the USA: is there a structural relationship? An empirical analysis. Applied Economics, 40(19), 2537-2555.
Classen, T. J., & Dunn, R. A. (2012). The effect of job loss and unemployment duration on suicide risk in the United States: A new look using mass‐layoffs and unemployment duration. Health economics, 21(3), 338-350.