Unemployment
Unemployment is a situation whereby aspects of manufacture are willing and are capable of being hired at the governing market wage rates but are compulsorily unutilized or underutilized.\u00a0 \u00a0The number of unemployed individuals will depend on the price of expansion of work opportunities which in turn depends on the level of growth of the economy, government policies, and techniques utilized. The United States is the leading economy of the world under a recession since 2008. However, the level of unemployment is at a higher record, and it is the most significant problem area for the policymaker. Since unemployment represents a waste of potentially productive human resources, unemployed labor signifies that the economy is not producing as much as it could. This intern implies that national income is lower where the level of unemployment is higher. The essay will focus on the causes of unemployment, effects and the policies to combat unemployment in the United States.
Causes of Unemployment in the United States
\u00a0Various factors contribute to lack of employment in united states. Firstly, it is contributed by lack of cooperating elements of production which are combined with labor in the production process. A company can only employ additional work if it has more of collaborating factors such as land and capital. The United States lacks these factors especially money and foreign exchange. Secondly, the use of inappropriate technology in relation to the resource base. In united states, technology is capital intensive which is inappropriate since the US is a labor surplus economy. In this case, a higher capital-labor ratio implies less labor is absorbed in the production process thereby causing unemployment. Thirdly, welfare payments. The aid given to the unemployed people by United state government reduces the preparedness to work. This is measured by an indirect negative impact of prolonged unemployment reimbursements since individuals become more dependent on the grants they receive. People tend to register for administration endowments even if they are not looking for jobs and the motivations, they get is enough to fulfill their daily necessities. In this case, through welfare payment people remains deliberately unemployed (Pool, Burgard, Needham, Elliott, \u00a0Langa, " de Leon, 2018).
Effects of Unemployment
Unemployment is a significant life event that can have an overwhelming influence on people\u2019s lives. It does not only disturb the unemployed person but also the associates of the family as well as the community (Davidson, 2018). When separate loses his or her job, there is always a direct influence on the living standards of an individual. Before the great recession, the average level of saving rates in the United States have been drifting down to zero. On the contrary, lack of employment can cause families to repudiate educational occasions to their kids and as a result leading to a decrease in economy future skills. Comparatively over 70% of what the U.S economy generates goes to private consumption and jobless workers (Hafstead, Williams, 2018). In this case, the production leaves the economy, which decreases the level of GDP and prevents the effective distribution of its resources. Consequently, organizations spend more on unemployment by paying tax. A higher level of unemployment will mean an increase in the tax on companies hence depressing companies from appointing more workers. Firms will not only faceless demand for their products, but also it will be too much exclusive for them to retain or hire workforces.
The Solution for Unemployment in The United States
To solve the higher level of unemployment united state should expand monetary policy from the federal reserve. This will lead to a lower interest rate for citizens to borrow what they want hence stimulating the economy to go back on track. Additional, low-interest rate will make the businesses to hire less and acquire financial capital that will produce higher enough employee to meet the rising demand (Hafstead, Williams,2018)). Relatively, where the recession is severe, there is a need for a fiscal policy whereby the administration must either cut tax or growth spending to stimulate the economy. The expansionary monetary policy will provide much confidence to the government to lower the level of unemployment. Additionally, the United States should increase the creation of employment in the private sectors since public sectors are the largest employers and the potential for job creation in public areas is limited. In this case, the government of united states can support private sector development through the creation of an enabling environment. Reducing the budget deficit will have the properties of depressing interest rates and simplifying individual sector growth.
Conclusion
In summary, a higher level of unemployment signifies a waste of potentially productive human resource hence making the economy to produce less as well as low national income. \u00a0In this case, the government of united states should come up with various policies that will help to combat unemployment. The systems will either aim to reduce the total number of unemployed people or increase the level of job creation. The procedures should be linked to the various causes of unemployment hat comprise of inappropriate technology, lack of cooperating factors of production and the distortion of relative factor prices.
References
Davidson, P. (2018). Why Neither Samuelson’s Neoclassical Synthesis Keynesianism Nor New Keynesianism Theory Is Compatible with Keynes’s General Theory Explanation of the Cause of Unemployment. In Alternative Approaches in Macroeconomics (pp. 57-76). Palgrave Macmillan, Cham.
Hafstead, M. A., " Williams, R. C. (2018). Unemployment and environmental regulation in general equilibrium. Journal of Public Economics, 160, 50-65.
Kroft, K., Lange, F., Notowidigdo, M. J., " Tudball, M. (2018). Long time out: unemployment and joblessness in Canada and the United States (No. w25236). National Bureau of Economic Research.
Pool, L. R., Burgard, S. A., Needham, B. L., Elliott, M. R., Langa, K. M., " de Leon, C. F. M. (2018). Association of a negative wealth shock with all-cause mortality in middle-aged and older adults in the United States. Jama, 319(13), 1341-1350.
