The Factors Affecting Unemployment : A Study Of Us Economy Essay

In any economy, no matter whether it is controlled by the government or by free markets, people need to work in order to support it. The government does not generate tax revenue by magic. There have to be people in that economy earning an income to ensure that the government continues to collect taxes. In a free market economy, the same applies because there are some services which only an organized government can supply (such as protection from extra-national threats), but there also those which the people get for themselves because of the working of the markets. In any scenario, unemployment is, at the very least, a drag on the economy, and it can be much worse. This paper examines how the unemployment rate in the United States is underreported, and how that fact effects the sluggishness of the present economy.

The unemployment rate is divided into variables; such as employment level, unemployment level, labor force and stock variables. At a certain time in a recession they are measured in quantities. Due to a flow of variables such as natural populations, net immigrations, new entrances, and retirements there is change to the labor force.

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.

Beginning with unemployment in the 2007-2009 recession, U.S. unemployment rates peaked at 10% as well as held 41 consecutive months at rates higher than eight percent (Lazear 1). The U.S. economy plummeted during this time; many attributed the shift to a large decrease in the number of employed workers. To be able to better understand the unemployment issue, we must first examine the form of unemployment faced by the U.S. economy. Many believe that the changes faced by the U.S. labor market

The Depression was a gruesome time where people had worked relentlessly to survive. Unemployment today is as severe as it was in the 1930s, the unemployment rate of today is nowhere near the unemployment of the Great Depression. A pair of economists with the Federal Reserve Bank of Dallas created report called “A Historical Look at the Labor Market During Recessions”. The report is a graph of the WWII Recession, showing that the unemployment rate of a few years ago has past the unemployment rate of the WWII Recession. In 2008 the authors wrote the Unemployment Rate, it’s a report that describes the recessions of the past to the years of 2006 to 2011. The most of the recessions are above or near the average, but the highest recession is the Great Depression.

Since the early 2000’s the unemployment rates of the United States have been constantly changing. For most of this time unemployment rates were increasing at a quick pace as the country was dealing with internal financial issues of its own. When people are out of work the rates of depression and crime seem to skyrocket. This is due to the lack of funds coming into a home which result in some less than admirable acts being committed. There are many causes of unemployment and many effects that unemployment can have on not only our economy, but our personal lives as well.

In fact, much of the recent reduction in the deficit is due to the decline in unemployment” (p. 1). With record high deficits within the last years the idea of the government spending to spur the economy that ultimately would help reduce the unemployment level seems near impossible without further affecting the deficit rather than helping reduce it.

The unemployment rate averaged 8.5% in 1975, almost 10% in 1982, and has been above 8.8% for more than two years, with little evidence of any improvement ahead.”

During the great recession era that began in late-2007 and lasted until mid-2009, the labor market took a major loss. The reasons that caused the labor market to plummet during this time frame were due to unemployment, a decrease in income and lack of education. Despite the efforts from the government to help as much as possible, the labor market had taken the worst hit and was at its lowest since the last three decades. It is important for everyone to understand what a weak labor market can result in. In this paper, I will discuss these findings and what impact they had on the labor market to weaken it to such a low point.

Unemployment Issues in the United States Unemployment is one top issue that our government faces on a daily basis. Many people are being unemployed as we speak. Even though the government is trying to take a lead on this major issue, the rate of unemployment is just too high. Why I feel strongly about this issue is because many of us continue to search for jobs daily and still no reply. There are many reasons behind being unemployed and those reasons are little issues that the governor himself can fix within a year or so. We are still jobless, the minimum wage is too low and most of the jobs that pay well always ask if one Spanish.

The United States is currently experiencing a slow recovery from the recession of 2008-09. The current unemployment rate is 7.7%, which is the lowest level since December of 2008 (BLS, 2012). However, this rate is believed to higher than the rate that would occur if the economy was operating at peak efficiency, and it is also believed that there are structural issues still underpinning this performance. For example, the number of Americans who have exited the work force as the result of prolonged unemployment is believed to be higher than usual. In addition, the Congressional Budget Office (CBO, 2012) notes that long-term unemployment of greater than 26 weeks is at a much higher rate than normal, which will have adverse long-run effects on the economy, since workers with long-term unemployment often find their career paths derailed.

The unemployment rate in the United States has improved dramatically over the last two years, from a high of 8.3% in July 2012, to a low of 6.6% in January 2014. In October of 2012, the civilian labor force increased from 578,000 to 155.6 million, labor force participation increased up to 63.8%, and total employment overall rose by 410,000! Since then, the unemployment rate has been falling at a stable rate due to a political push from Washington DC and new employment initiatives. The inflation rate over the last 2 years has been relatively stably, with a few major increases and decreases in 2012 and 2013. It reached a high of 2.3% in June of 2012, and reached a low of 1.0% at the end of 2013. The federal interest rate has remained at a constant .25% over the past few years.

The unemployment rate is also affected by monetary policy. “Unemployment that is above the natural rate involves great economic and social costs.” (McConnell & Brue, 2004). GDP GAP and OKun’s Law. McConnell and Brue define this as “when the economy fails to create enough jobs for all who are able and willing to work, potential production of goods and services

Downsizing, restructuring, rightsizing, even a term as obscure as census readjustment has been used to describe the plague that has been affecting corporate America for years and has left many of its hardest working employees without work. In the year 2001 we had nearly 1.8 million jub cuts, that’s almost three times as much as the year 2000(Matthew Benz). In the 1990's, one million managers of American corporations with salaries over $40,000 also lost their jobs. In total, Fortune 500 companies have eliminated 4.4 million positions since 1979 including the 65,000 positions cut in February of 2002 (Ellen Florian). Although this downsizing of companies can have many reasons behind it and cannot be

Unemployment has always been something that Americans have worried about since the great depression in which one in every four people was unemployed. High unemployment has an impact on every one even those whom are still currently employed. For example if the unemployment rate is particular high then even those with jobs get worried. Unemployment is also separated in to distinct categories base on which group is the focus of the study. The categories can be by race, age or location, for example the unemployment rate of those between the age of sixty and sixty-five could be compared those between the ages of thirty and thirty-five. These categories allow economist to see which groups are the best and which groups are worst off. One group