Unemployment: A Universal Problem
Unemployment is a dreadful problem that is universally condemned. The growing rate of unemployment has far-reaching consequences for individuals, societies, and the country as a whole.
The Impact on Individuals and the Economy
Despite this, academics and economists think that there remains a threshold of unemployment that cannot be eliminated. The majority of the expenses of high unemployment rates are of the dead loss sort, and there is no way to avoid the gains to the costs that one must endure. This research study tries to examine the effects of high unemployment rates on both individuals and the economy as a whole. An individual experiences economic hardship the moment they lose their job and this has a significant effect on their standards of living. Without a paying job, one faces the risk of getting closer to serious financial trouble.
The Erosion of Skills and Pessimism
Increased rate and prolonged unemployment has the capacity to erode skills and rob the economy of otherwise talents that are meaningful. The experience of unemployment also interferes with the way people plan their future hence leading to skepticism and pessimism. Their value for education and training is lowly appreciated by highly unemployed individuals and this makes them nit invest their time in acquiring the relevant and necessary training needed for the job markets in order to boost the economy. On the other hand on a similar perspective, the lack of income resulting from high rates of unemployment makes the parents not to afford education for their children. Lack of proper education deprives the economy of such useful future skills (He, 2013).
Mental Health and Social Consequences
In the line of an individual basis, prolonged unemployment predisposes an individual to mental health issues. Such consequences have the capabilities of worsening the physical health and shorten lifespan of the unemployed people. This has a significant effect on the economy as the affected individuals may not have the capacity to fully participate in the growth and development of the economy.
Unemployment and its Ripple Effects
When the rate of unemployment becomes pervasive in a country, there emerge increased calls for protectionism as well as increased restriction on the opportunities for immigration. Protectionism has the potential of resulting in retaliations between countries hence leading to harming of trade relations and the economic wellbeing of the trading partners. On the social context, high levels of unemployment leads to decline in volunteerism and increased rates of crimes in the society (Peterson, 1982).
The Enormous Costs to the Country
The costs of unemployment to the country are enormous. It leads to increased payments from the federal governments and the states for the unemployment benefits, food assistance and medical insurance. It also result in reduced collecting of revenues in form of taxes by the government, hence forcing the government to increase their borrowing or reduce other government spending.
Implications for Companies and the Economy
The consumption of government support by people experiencing unemployment reduces the GDP of the country as a result of the inefficient distribution of resources by the government. Local companies may also feel a pinch due to increased levels of unemployment in the country. Benefits of unemployment are mostly financed through taxes obtained from various companies and businesses. When the rate of unemployment is high, the state will respond by increasing taxes on companies and this will counter intuitively discourage the companies from hiring more workers into their organizations. Due to such expenses, the companies might not have the capacity to retain all of their employees hence take initiatives like retrenchment that contributes to the problem of unemployment. In fact, the higher the rate of unemployment, the more companies does not hire new employees (Taylor & Saunders, 2002).
Other Consequences of High Unemployment Rates
Additional effects of increased rates of unemployment included increased poverty rates, hysteretic effect whereby those unemployed for long find it difficult to work in future and other increased social problems that directly impacts of the growth and development of the economy. High unemployment rates lower the nation's economic growth and this hurts the pockets of the economy such as consumer and construction spending. When the unemployment is high, the consumer have little left to spend and less to add to their savings. Less spending leads to weak economic expansion and this damages areas such as construction that might provide jobs to the economy and benefit the unemployed (Haugen & Thompson, 2011).
Conclusion
Increased rates of unemployment have equal increased economic consequences. This is a phenomenon that is contagious to the development of an individual and the economy of the nation. Occurrences such as loss of earnings to the unemployed, potential homelessness and poverty, stress and health problems, increased government borrowing reduced GDP of the economy and increased rates of social problems are some of the challenges that comes with increased rate of unemployment. It is therefore feasible for nations to come up with immediate incentives and initiatives that will facilitate the eradication of increased unemployment rates in order to restore the growth and development of the economy.
References
He, A. (2013). Effects of unemployment insurance extensions on job search outcomes.
Kolm, A.-S., & Larsen, B. (2003). Wages, unemployment, and the underground economy. Munich: CES.
Haugen, D. M., Musser, S., & Thomson Gale (Firm). (2011). Unemployment. Detroit: Greenhaven Press.
Peterson, W. C. (1982). Our overloaded economy: Inflation, unemployment, and the crisis in American capitalism. Armonk, N.Y: M.E. Sharpe.
Taylor, R., & Saunders, P. (2002). The price of prosperity: The economic and social costs of unemployment. Sydney: University of New South Wales Press.
