UNEMPLOYMENT RATES IN THE US
Introduction
The unemployment rate has significantly increased in the United States over the past years. Unemployment rate refers to the number of individuals who are actively looking for jobs as a fraction of the labor force. There two main types of unemployment, Voluntary and involuntary unemployment. When individuals abandon a job willingly to look for another better position, it is termed as voluntary while when one is forced to look for another job even though is happy with the current job; it is involuntary unemployment. For years many scholars have come up with divergent opinions on how unemployment problem should solved in the US. In their arguments, every scholar has applied a specific theory to convince the government and other stakeholders on the matter. Additionally, several people have come up with policies that can enable the government handles the problem of unemployment. This paper evaluates the unemployment rate in the United States and provides various recommendations on how to solve the problem.
To begin with, three major types of unemployment exist in the USA, apart from the two major categories. They include structural, frictional, and cyclical unemployment. Structural unemployment occurs when the labor market is unable to provide jobs to unemployed people because they do not have the required skills. Technological advancements also cause this type of unemployment whereby machines replace the labor force of people, or their skills become outdated; hence, they unable to keep up with new trends. Frictional unemployment is short lived. It occurs when an individual changes from one job to another. The period of transition is when frictional unemployment occurs. Finally, cyclical unemployment occurs due to severe economic downturns. In this case, employers fail to provide ample employment opportunities because they do not have enough funds.
Recently, many people in the United States are unable to meet their family responsibilities because they do not have any form of employment. According to recent research, university graduates take up to five years before securing a job in the country. Also, college graduates, some end up being jobless lifetime because their specialization does not attract the attention of any employer. Besides, some graduates end working in areas that they have not trained on such that they earn a living.
Shifting of business processes and manufacturing companies from the US has dramatically contributed to structural unemployment in the country. Due to the increased value of the dollar, exports have reduced significantly while the imports have increased greatly. As a result, many businesses have shifted from the USA to other countries to expand their market globally. Large corporations in the country have also increased their efficiencies such that they make more profits in the long run by reducing their operational costs. Through this method, they have cut the labor cost by almost half, leaving several people unemployed.
Government policies have also contributed significantly to unemployment in the United States. Regulations aimed at improving the welfare of workers have contributed significantly to unemployment. For example, the standard wage rates for employees have scared many employers from recruiting many people due to increased operational costs. Additionally, the increased levels of immigrants to the country have made several US citizens jobless since the immigrants are willing to work at a lower wage rate compared to indigenous citizens. Over the years, the population of the US residents has increased significantly a factor that has contributed to the scarcity of resources and jobs in the country.
Many researchers argue that unemployment can reduce if the government will spend more funds in the economy, especially during the time of economic recessions. According to their view, market economies undergo a boom and bust cycle. As a result, the government should spend more funds to ensure that the economy of the market is stable. Various governmental projects should be set up during economic recessions in the country. Besides, the government should start numerous projects such as road construction in various parts of the country to employ unemployed people. Finally, the government should reallocate some of its funding from the military sector to the civilian economy. Annually, the US government spends billions of money in the military, a sector that is capital intensive. If some funds can deviate, then the unemployment rate will reduce drastically.
However, other people argue in a different way that unemployment can only be solved if the government withdraws some policies and regulations that govern employers on labor. The ministry of labor should reduce the minimum wage that an employee needs to be paid by the employer based on a level of competence. According to recent research, several graduates in the United States fail to get a job because their wage rate is high compared to diploma graduates. Even though the policies assist people from being exploited, the ministry should consider revising them such that they are attractive to employers.
Moreover, the government should reduce the amount of taxes imposed on companies annually. High taxes in the country have dramatically increased the operational costs of most companies in the US. As a result, most employees have devised ways to minimize operational costs. One of the methods is reducing the number of employees. To end the problem, the government should reduce the taxes such that rate employment can also increase. Finally, the government should subsidize the amount of money spent by employers to cater to various insurance covers. Most investors in the country are scared of spending millions of dollars to cater to the health insurance covers. If these regulations are revised then we can realize more employment in the country.
The Keynesian theory outlines that unemployment is witnessed in an economy when there is a demand deficit in the marketplace. Demand refers to the willingness of people to purchase the available products and services in the market. If the demand for goods and services reduces, organizations require less production process at the same time fewer workers. They do so to cut the operational costs incurred by the company. However, in any capitalistic economy, the economy must experience a boom and bust cycle. The bust cycle is characterized by unemployment and low demand. If the demand increases, then it is likely that the employment rate also increases. The Keynesian theory explains cyclical unemployment. The method recommends that the government should increase the supply of money in the economy through government projects that will employ jobless individuals.
Further, the theory recommends that the government should set up strategies that can increase consumer confidence to purchase the goods and services. One of the methods is through subsidizing the commodities during the bust period. By so doing, customers will buy more, forcing the companies to increase their levels of production. Additionally, the government revitalizes the production process by providing financial assistance to organizations. One such case was witnessed in the year 2008 when the USA experienced a financial crisis.
According to the classical unemployment theory, unemployment increases when there are government regulation and intervention. Regulations are simply of taxes, operational policies, and wage laws. Regulations such as wage rates increase the labor cost incurred by employers. When the fees exceed the budgeted fund’s businesses respond by reducing the number of employees, especially those with low competency. The method enables companies to optimize their profits; on the other hand, the unemployment rate increases.
Labor policies that promote the welfare of the workers also play a significant role in increasing unemployment in the country. For instance, mandatory health care insurance covers for workers in the United States discourage many employees from hiring more workers. Fines and taxes imposed on businesses also promote unemployment as many investors feel secure working with a few employees. Policies that govern internship programs prevent many entrepreneurs from training students to the required level of competency since the government does not fully appreciate their role.
Conclusion
Though the US economy is among the best economies in the world, there is still a challenge of unemployment. Though several factors influence the unemployment rate, the government needs to declare unemployment as a microeconomic problem that needs serious attention. Most US citizens have been unable to provide for their families because they have no job. Graduates take up to five years without securing any position in the country. The classical unemployment theory and Keynesian theory offer substantial solutions to the problem of unemployment. The government needs to intervene on this issue by revising its policies and regulations that govern the labor sector. The procedures should be reasonable to employers such that they hire more workers. Additionally, during the bust periods in the economy, the government should provide finances to employers such that people do not lose their jobs.