Unemployment in America
The Ugly, The Bad... & The Good?
There's nothing exciting about being unemployed. In a perfect world, everyone would all be happily employed in a job they love. While unemployment is one of the country's biggest issues, 100 percent employment would actually harm the economy. This paper will examine the problem of unemployment, what solutions might help fix it, and how a little bit of unemployment is actually healthy for the economy.
First, the ugly. Unemployment affects everyone and that’s why it is such a top issue for Americans. “When someone loses a job, a family is affected. When many people lose their jobs, eventually the whole nation is affected. Workers lose income, while the country loses production and consumer spending.”1 The dictionary definition of unemployment is “the state of not having a job.” “Unemployment has retaken its place in Americans' minds as the country's biggest problem, according to a new Gallup poll published Monday... And while the jobless rate fell last month, the drop was due in large part to the long-term unemployed giving up on looking for work.”2 This means there are actually more Americans out of work because when people stop looking for jobs, they aren’t counted in the unemployment numbers anymore. Many Americans believe unemployment is the biggest problem facing the country.
Unemployment has been a problem in the U.S. for a long time. “For the five years from December 2008 to November 2013, the US unemployment rate remained above 7%, peaking at 10% in October 2009. This period of high unemployment is not well understood. Macroeconomists have proposed a number of explanations for the extent and persistence of unemployment during the period.”3 Their explanations include job losses caused by major shocks to the financial and housing sectors, unmotivated unemployed workers who are satisfied receiving long term unemployment benefits, and low demand for employees caused by companies with pessimistic outlooks and faced with a sudden need to repay debts.
Recently, there has been even more bad news. Companies are laying off a lot of their employees for fear of a new recession. “The nation lost 524,000 jobs in December, reflecting a pervasive fear among employers that if they fail to shed workers quickly their companies may go under in a recession poised to become the worst since the 1930s. The December decline in jobs came on top of similar losses in October and November. Not since 1980 has the workforce shrunk so much in just three months. Companies across all industries are grappling with sales that are deteriorating rapidly just as they lose easy access to loans.”4 People who are unemployed for a long period of time may never fully recover as individuals. “Most economists agree that multi-year unemployment spells have permanent negative effects on workers’ productivity and pay, in addition to their happiness.”5
What has been proposed to fix the problem? Early this year, “Democratic leaders in the Senate [planned] to fast-track legislation to extend unemployment insurance, a move that would provide a lifeline to more than a million jobless Americans who lost their benefits five days ago.”6 Would this plan work? Wouldn’t giving even more unemployment insurance to those who are jobless only give them a bigger crutch to lean on? Some proposals are made just to buy more time to figure out a better solution. Unemployment is a problem that does not have one easy fix. Since they were hit the hardest, growth in the financial and housing sectors would help. So would an increased confidence in existing companies, or the creation of new companies in expanding industries. Workers who are willing to be retrained for new jobs can also help fill some of the gaps.
Finally, the good.