Unemployment In The United States Economics Essay
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Unemployment is one of the major social problems affecting many countries in the world, US being no exception. Unemployment, also referred to as joblessness, is a situation where people lack jobs yet are actively searching for work. The most affected, according to research, are the youths who find themselves idle for lack of jobs after completion of their studies. The rate of unemployment is a measure of the unemployment prevalence, which is calculated as a percentage by dividing the number of unemployed people by the total number of those in employment. Research shows that many countries experience high unemployment rates during recession periods. This kind of scenario was experienced in 2011, according to Yates (1994), who reveals that more than 200 million individuals across the globe found themselves out of employment because of dwindling economies.
In spite of the fact that the US is one of the most developed countries in the world with a relatively stable economy, it has a considerable rate of unemployment among its citizens (Yates, 1994). This issue has not always gone well with the US citizens and politicians who use it as a tool to fight their opponents during political campaigns. The objective of this paper is to explore the problem of unemployment in the United States.
Despite being the world's superpower, there are so many people in the US who are unemployed. Wassel (2011) reveals that there are about 13.9 million American who are jobless. He notes that this figure only accounts for those looking for jobs. Wassel goes on to justify the magnitude by arguing that there are more people who are unemployed in the US than the total population of people in the state of Illinois, the fifth largest state in the country. In fact, he translates this unemployment rate to mean that if they were to be a country, then the unemployed in the US would be regarded as the 68th largest country in the world, which would be bigger than population of Portugal and Greece, which stands at 10.8 million.
This high unemployment rates experienced in the US has mainly been blamed on the declining economic growth that has been experienced in the US following global financial crisis. Nevertheless, the US government have been struggling to come up with polices to help boost the economy so that many job opportunities can be created for the unemployed in the US. Indeed this has seen a decline in the unemployment rate since President Barack Obama introduced an economic stimulus package. It is also noted that historically since 1948 till 2012 the rate of unemployment in the US averaged 5.79% and at one time reached the unprecedented high of 10.80% in 1982, with a record low of 2.50% in May 1953. However, the most recent economic survey shows that the rate of unemployment in the US has been on the decline and stood at 8.10% in August 2012 down from 8.30% in July and 9.10% in the year 2011 according to the US economic survey 2012 (Yates, 1994).
Data from the Bureau of Labor Statistics on August 2012 also shows varying rates of unemployment by states and districts in the US. The statistic shows that the state of Nevada leads the pack with an unemployment rate of 12.0% followed closely by the Rhode Island at 10.8, California 10.7, South Carolina 9.6., New Jersey 9.8 and North Carolina 9.6. The states with the lowest rates of unemployment are North Dakota 3.0%, Nebraska 4.0%, South Dakota 4.4% and Oklahoma 4.9 % (The Washington Post, 2012).
Leading causes of unemployment in the US
Several reasons have been singled out as the leading causes of unemployment in the US according to economists. One such is the fact that there are fewer job openings taking place in the US. Jacob (2011) notes that, after the recent financial crisis, a number of new job openings declined to below 3 million jobs compared to over 4.5 million new job openings which was the case before the financial crisis hit the US and the entire world. This meant that new graduates being produced on an annual basis in the US could not get jobs thereby leading to unemployment.
Economists also argue that the unemployment rate being experienced in the US is attributed to lack of real growth. The economy of the US has gripped over the years, the worst being experienced during President George Bush's reign. President Obama has been struggling to turn it around, but nothing much has been achieved. For instance, Jacob (2011) reveals that only 36,000 jobs were created in January 2012, a figure which was far below the economists' projection of at least 150,000 new jobs to keep up with the ever increasing population. In fact, this has formed the main debate among politicians, especially from the republican candidate who is using this scenario to try and woo voters to his side. He argues that Obama administration has failed to revamp the economy so as to create new jobs for the many youths in the country who are languishing in poverty for lack of employment.
Economists argue that China has a great impact on the unemployment witnessed in the US arguing that China is grabbing US jobs in masses. They argue that the policies adopted in the Chinese market, resulting in very low labor costs, have moved several businesses to China from the US, where labor costs is relatively high. This has seen very few businesses and companies being set up to create more jobs for the youths in the country. In addition, economists argue that the expending trade deficit is also eating up the economy of the country as so much money is channeled to the other parts of the world (Jacob, 2011).
It is also pointed out that a majority of US companies are facing a lot of competition from international companies from such countries as Japan, China, India and Germany among others. As a result, it has become quite impossible for these companies to cope with the fierce competition resulting in financial problems. It is reported that these have forced many companies in the US to close down. The impact of company closure is that many people who had been previously employed are rendered jobless. Economists also argue that advancement in technology has played a major role in unemployment experienced in the US. They note that many companies in the US are automating their production facilities. This has seen many workers being replaced by machines thereby rendering many people jobless. It is projected that, as the technology advances, many people will be replaced by machines, a factor which will see the unemployment rate increase in the US unless action is taken (Jacob, 2011).
It is also reported that some people in the US opt to remain jobless because they consider the minimum wage rate of $6.55 per hour far below what they can earn in case they were employed in other countries like in the Asian market. This has contributed a lot to the unemployment being witnessed in the US today (The Washington Post, 2012).
In conclusion, it is evident that unemployment in the US is a major social problem. As such, stringent measures and better policies should be instituted by the government to help reduce the rates of unemployment, which can be done by ensuring that the economy is stabilized, reducing taxes on businesses and creating a conducive environment that promotes business in the country. This is because when people remain jobless, this will see majority of these people engaging in illegal acts such as crimes, which will only worsen the current state of economy of the country.
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