UNEMPLOYMENT AND ITS UNINTENDED CONSEQUENCES
Introduction
The world has been overwhelmed by more unpredictable economic circumstances recently, perhaps best evidenced by global financial crisis (Barry, 2005). As such, when economies cycle between booms, recessions and even outright depressions, unemployment both of productive resources, especially, capital remains a factor that many people as well as governments must content with, at any times of their nation’s history and career life.
This is especially so given the massive global population expansions which have hardly been matched by increased education and skills acquisition, effectively leaving huge proportions of the population vulnerable to staying unemployed at the slightest upheaval in the economy. Definitions for unemployment vary, it is however, commonly defined as the proportion of people within an economy, who are qualified and willing to work, but are unable to find suitable employment. Its rate is estimated as a percentage of the number of unemployed people divided by the economy’s population size.
Background
There are difficulties about defining the problem with precision, and even more so, theoretical debates persist about the causes of, effects, possible solutions or even the desirability of the phenomenon (e.g. as a safety valve to fight inflation). In order to have a good idea of the problem and its effects, it is instructive to have an understanding of the different types of unemployment and their respective causes (Barro, 2008).
Unemployment is broadly categorized into involuntary and voluntary, where the former arises from the wider economic, political and economic adjustments or failures of the system to adjust appropriately and these includes wide ranging adjustments in the market demand, the structure of the factor and commodity markets, coupled with the effects of government policies (Cavanagh & Mander, 2006).
Voluntary unemployment is said to arise form the individual decisions by affected population to remain without employment. More specifically, there are five different categorizations of unemployment; these include frictional, structural, cyclical, classical and seasonal employment.
Frictional unemployment, which is often temporary, arises from a mismatch in the supply of jobs with the available skills qualifications of the unemployed i.e. when individuals are between jobs, seeking new jobs, more education or skills. As such, this form of unemployment is bound to be always in the economy as people continually move between regions, change their attitudes, preferences or skills etc. Structural unemployment refers to the changes in the structure in the economy, resulting in the failure of the market to avail suitable jobs for all the level of skills of all people in the economy.
While it is hardly separable from frictional unemployment, structural unemployment last longer and is largely unresponsive to short term government interventions (McConnel, 1999). In addition, structural unemployment largely stems from occupational and geographical immobility the labour force, coupled with changes in technology which necessitate retraining or cut back the level of man power required.
Classical unemployment, alternatively referred to as real wage/disequilibrium unemployment results from a decline in labour demand due to “above equilibrium” level of wages and hostile trade union activities that results in increased labour supply coupled with increased adoption of technology (Kim & Sheen, 2000). Cyclical unemployment on the other had results from a decline in the commodity markets which ultimately leads to a fall in production and equally declining demands in the labour demand e.g. during recessions, while seasonal unemployment results when seasonal jobs peak off.
Unemployment presents growing challenges both to the government, social services as well as the affected individuals’ and their immediate families. This is further worsened by the depth of the contemporary economic problems, coupled with the relatively slow rates of recovery, that impose huge burdens on the Federal State Unemployment Insurance Agencies as well as other social services (Trading Economics, 2010).
Generous benefits for the unemployed make unemployment attractive, leading to more people choosing to stay unemployed. These social and insurance agencies have been faced with growing costs, to the brink of bankruptcy for over a decade, costs that ultimately find their way to every working American’s pay slip through increases in Federal and State taxes, reduced state benefits as well as repayment of government debts. During recessions, governments are neither able to raise taxes nor cut the unemployment benefits, which puts the insurance agencies and social services in a difficult position.
This research seeks to answer the question; what are the unintended effects of unemployment have been found and what individuals and institutions are the worst affected by it. Undesirable consequences are used in this study to describe negative, indirect, unintended, unexpected, effects, or side effects, consequences, results and or unanticipated results of unemployment. To answer this, two studies are proposed (Cavanagh & Mander, 2006).
This includes an extensive literature review of peer reviewed journals on unemployment, journals bearing “99’ers” or surveys by other scholars. The 99 factor is particularly critical since it not only describes the unemployed for the previous 99 weeks but represents the time after which unemployment benefits stop, effectively depriving the unemployed of an important safety net.
Hypothesis
Unemployment is inevitably linked to serious economic and social dysfunctions occurring within the confines of Social Structure. Many of these irregularities are obvious, but others are rather insidious and concealed. Together they define the unintended consequences of unemployment.
Rationale of Study
Unemployment has obvious impacts on the economy as well as actual incomes of individuals. However, the unintended consequences of unemployment, which are the most harmful to society and the economy, are seldom researched because people do not discuss them openly. This study is expected to close this widening gap by revealing the hidden consequences of unemployment. It is the researcher’s belief that huge impositions have been thrown upon social welfare in addressing individual as well as group scenarios of hardships.
Significance of the Study
Possible alternatives to incentives are encouraged with regards to decreasing voluntarily unemployed and replacing it with a desire to work earning a personal income. Importantly, speculations are that in a number of instances some clients exploit the opportunity of state benefits instead of upholding integrity of being able to attend school; obtain the necessary qualifications to work and simply run to the job market for employment. In addition, these research findings hopefully will alert financial planners to new avenues to be targeted in resolving this social menace. Solutions to the financial problems facing unemployment insurance agencies are imperative in establishing the best policies to remove incentives for dependency on the system (McConnel, 1999).
Conceptual framework
The law of unintended consequences is the theoretical concept embraced in this descriptive quantitative analysis of unemployment and its effects on social structure. Specific theoretical assumptions pertaining to this law were developed by renowned American sociologist, Robert K. Merton. Merton posited that there are three types of unintended or unanticipated outcomes. They can be positive, which means beneficial, negative being detrimental and pervasive, which are contrary effects that were never intended to be a part of the outcome. (Merton, 1936).
Theoretical speculations on this law associate it with Murphy’s Law that confirms the adage, “anything that can go wrong will go wrong." ( Murphy). Precisely, it is an alert to scientists that despite strategic interventions there will always be outcomes for which there was no intention. In this case being researched it is unemployment and its unconstitutional effects on the American social structure with special reference to Maryland.
Scope and limitations
As was emphasized in the Conceptual Framework this paper focuses on the law of unintended consequences to help capture the expected consequences of unemployment, as well as the unexpected effects this social phenomenon. The study is limited by the possibility of bias or false responses from the affected parties, coupled with an over reliance on the literature reviews, especially, when evaluated from a paradigm of the reality psychological impacts of unemployment as well as the economy. Most likely these factors can render existent literature irrelevant.
Expected Learners’Outcomes
-To obtain a deeper understanding of the nature, causes and types of unemployment
-To understand the direct causes of unemployment
- To establish realities relating long-term effects of unemployment by exploring currently available literature, despite present constraints
-To gain a deeper understanding of the indirect consequences of unemployment
References
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