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) …show more content…
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
Unemployment refers to when an individual is actively seeking work and is aged 15 years or over, but is unable to find work (not hired). There are many causes and effects of unemployment that result in different actions being made by the Australian government through their use of both monetary policy as well as fiscal policy.
Unemployment is currently measured in the United States by counting those who "do not have a job, have actively looked for work in the prior four weeks, and are currently available for work" (Leonhardt). This means that a great deal of people are not counted as unemployed because they are discouraged and have not looked for work in the past four weeks. Or, the person was injured in some way and they are "not currently" available for work. This does not mean that the people in either of these groups do not actually wish to find work, but it does mean that they are not counted because of an archaic system that has been used by
The largest cause of unemployment can be attributed to recession. The term recession refers to the backward movement of the economy for a long period. People spend only when they have to. (Nagle 2009). With people spending less there would be less money in circulation therefore, enterprises would suffer financially and people would suffer too. This is so because recession reduces the fiscal bases of enterprises, forcing these enterprises to reduce their workforce through layoffs. These enterprises lay off their workers in order to cut the costs they incur in terms of wage and salary payments.
Unemployment issues affects the community because they tend to have health problems, depression issues, stressed, low self-esteem issues, isolated from family and friends or tend to use some type of substance and abuse it, which happens to many of people and causes poverty within the community. When individuals have been laid off and terminated it’s a reality for many. Even though individuals may have the skills and education background that will qualify them for a new position some employers have filed the position with individuals that may not have met the requirements.
There are many different age brackets, genders, and ethnicity that make up unemployment in the labor force. Some of the same people who were once in the labor force also make up the workers who are not counted in the labor force anymore. Unemployment is important to the economy and the society that we live in because the more people without any jobs and/or not having a legitimate source of income will increase crime, poverty, political unsteadiness, downgrade health standards, and mental health problems. Unemployment can also cause underemployment which is not good for the economy. Underemployment, in one of its usage, is defined as the employment of
Unemployment is considered the key indicator of a nation's economy and high unemployment rates will send shock waves through the economy. Unemployed individuals don't have expendable income which translates to a cut back in non-necessary spending which means a loss of sales tax revenue. The fewer individuals with decent paying jobs translate into fewer individuals making investments due to fear of financial security. Nations that are not financially stable creates a financial system with little confidence within the marketplace which will lead to a downturn in stock market value. Unemployed individuals are not paying state and federal taxes but instead sucking money out of the economy. Unemployed people will utilize unemployment insurance which will increase state deficits. Increases in unemployment insurance claims cause states to raise taxes to make up for the lost revenue created from unemployment. 45% of mortgage foreclosures is created by unemployment. Unemployment propels bankruptcy rates and foreclosure rates to rise. High foreclosure rates will lead to home values to fall. The impact of poverty is vast as nations have to raise taxes to absorb the impact which will create an economic spiral which will decrease investment, drive down the stock market value, slow spending due to concerns about financial security which translates to poor economic growth (Hudson,
Unemployment is one of the main financial complications in America today. Individuals who are measured as unemployed if the individuals is looking for work or laid off for more than a week. There are numerous diverse details why an individual could be jobless. Three of those causes are cyclical, structural and seasonal unemployment. The administration tries to find answers in order to decrease unemployment by making up guidelines.
With there being a variety of labels for unemployment I believe that frictional unemployment best describes what the U.S. is experiencing. Frictional unemployment is can be viewed as more of a desirable state of unemployment because it was chosen by the person themselves. Frictional unemployment typically doesn’t last for long periods of time, but instead a short period of time. The individuals that fall under this type of employment are normally waiting for accept a job soon or they could be searching for a job. It may not sound like the best decision to make, but it has been found that most individuals move to better positions. This type of employment benefits both the employee and the employer because the employer has a qualified worker
Unemployment refers to the numbers of people not working and can be measured by the claimant count and labour force survey. There are different types of unemployment and each of them requires different policies to overcome them.
One of the major causes of unemployment today is the lack of capacity in the economy to create new jobs. Businesses lay off short and long-term employees, so the top dogs can continue to live their extravagant lifestyles. Financial
around the globe, explanations of this phenomenom are plenty. How does unemployment serve a purpose, or is it just another chance for the powerful to stamp on those with less power? The
Unemployment can be down to individuals characteristics, they may have become unemployed through their own fault such as misconduct. An individual may also not be trying hard enough to find work, preferring to get benefits instead. The government has responded to this by making benefits for the unemployed harder to get as they have to prove they are actively seeking work, this comes after claims benefits take away incentives to work.
Unemployment occurs when a person who is actively seeking employment but unable to find work. It is often used as measure of the health of the economy and has been one of Australia’s most serious long term economic challenges in recent decades. Economic growth is an ongoing process of increase in the production capacity of goods and services over a period of time. This determines economic wealth and individual living standards. These two economic issues have been a continuous matter within Australia, however the government has been actively addressing it with several policies which are varying in effectiveness.
Money is essential to any individual looking to have a decent lifestyle; labor is the avenue through which this is acquired. The economy goes through various fluctuations in activity causing unemployment to fall, rise, or level out. What this creates is the first type of unemployment, known as cyclical; frictional is the second type, caused by a temporary leave (for whatever reason) by the employee, and structural is the third type, varying with the economic changes in demand. The absence of unemployment at its maximum level is termed full employment, another version of unemployment. The term encompassing the sum of the frictional, structural, and, yet another type of unemployment, surplus unemployment is that of the natural rate of
Despite the fact that America is one of the most advanced nations in the world with a comparatively solid economy, it has a substantial unemployment rate among its citizens. This problem has not always integrated with the politicians and the citizens of the US who utilize it as a means to combat their rivals amid the political contests. The purpose of this paper is to discover the unemployment issue in the US.