Causes And Effects Of Unemployment

1611 Words Jan 22nd, 2015 7 Pages
Causes and Effects of Unemployment
Travis Epling
Strayer University
ENG 105
Jeanette Trammel
9/14/14

Causes and Effects of Unemployment There are many reasons for unemployment in the United States and around the world. Some of these causes are created by the individual and others are out of their control. No matter what the cause for unemployment, it has a devastating effect on the individual, family, and economy. Unemployment defined by the Encyclopedia Britannica is the condition of one who is capable of working, actively seeking work, but is unable to find any work. In addition, to define a person as unemployed, the person must be an active member of the labor force in search of work. (Encyclopedia Britannica, 2012)
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Monetary Effects Because unemployed people receive benefits from the government, there is a correlation between unemployment and increased government spending. The Employment Act of 1946 gave the government the responsibility of maintaining a high employment level of labor and price stability. The effects of this increased spending for unemployment benefits is that other government programs suffer a loss in their financial support. It also causes a decrease in the growth of the GDP. There are less people working so less goods and services are being produced and with fewer people to spend money in the economy there are less goods and services being purchased. This causes a decrease in demand of products and causes producers to lower their selling price to avoid a surplus. When the producer lowers their selling price, it causes the consumer price index to fall.

Social Effects
Various social effects spring from the people who are unemployed. They affect both our communities and the unemployed. The skills and knowledge from the unemployed is lost to our economy which keeps our economy from reaching its full potential. There is also an increase in crime and social strife during times of high unemployment. Bruce Weinberg, associate professor of economics at Ohio State University, Eric Gould, Hebrew University, and David Mustard, University of Georgia conducted a study of the national crime rates between 1979 and 1997 and found a direct correlation in falling wages
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