Introduction
Unemployment is a global issue that affects many countries. It is always necessary to address it because it is a key determinant of a country’s economic performance. A high unemployment rate will mean a lower G.D.P and lower productivity, hence a poor economy. Unemployment can be defined as the total number of persons without any productive activity as stipulated by a country’s measures. In other words, it is an economic condition where individuals with the ability to be productive seek jobs but are unable to find any (Catherine Rampell, 2013).
Overall employment and terms used
Unemployment is a global problem, it is hence considered wise for a country to be able to gather statistics from other countries, and compare with its own to get a clear picture of its performance, and key areas that require improvement. In order to understand unemployment on an international scale, several key concepts are considered. The unemployment rate is defined as the quotient of the number of people without work and total labor force (inclusive of the unemployed). Labor force is the number of people who want to work and can work. Labor force is not considered the total population because not everyone wants to work.
The U.S Bureau of Labor Statistics program of international statistics provides for international descriptive measures that are used for unemployment comparisons. The labor force, employment, and unemployment rates are among them. Hourly compensation costs of employees in different countries, and the rate of productivity is necessary in comparison. The gross domestic product per capita, and per employed person and the consumer prices are crucial factors.
The age limit for employment is at least 16 years. Therefore, to term an individual as unemployed, such an individual would not be involved in any productive activities but intends to find a job or has been, actively, looking for one. The rates of unemployment in any country like the United States could either be understated or overstated. Cases such as unreported illegal or legal employment, part-time workers, and discouraged workers could lead to overstating and/or understating. Therefore, the Bureau of Labor statistics has to remain vigilant and critical to minimize chances of such issues arising especially during the business cycle contractions and expansions.
In the United States, for example, the Bureau of Labor Statistics (BLS) has a responsibility of determining the status of the labor force, unemployment, and employment for slightly over 200 million American Citizens. The United States’ economic is a highly dynamic and complex one, meaning to measure an economic activity would not be easy. This creates a likelihood of flaws in the process of estimating the employment and unemployment status in the economy. On a broader perspective, these issues in measurement of the rates of unemployment in the U.S could be categorized into two: the first category is one that indicates that the true unemployment of human labor resources is probably greater than the representative unemployment rate. The second one suggests that the true unemployment of human labor resources is probably less than the representative rate of unemployment.
Discouraged workers are a setback to the BLS in its effort to estimate the rate of unemployment accurately. These are workers who are willing to work and have the capability of to work, but have lost hope after looking for a job in vain. In order for BLS to term an individual as unemployed, the individual must be actively seeking employment. Part-time workers have the desire to work full-time; however, the employers are not in need of their productive activities. During the calculation of the national unemployment rate, only part of their labor resources is included.
The United States has favorable living conditions compared with many countries in the world according to OECD. The country ranks above many industrialized countries in terms of Better Life Index. Money aids in achieving better living standards. In the U.S, the average household net-adjusted disposable income is $38 001 per year. This figure is above the recommended OECD estimate which is at $23047 per year. While there exists a significant gap between the rich and the poor in the United States, the rates of employment are also higher the OECD estimates at 67%. This means that 67% U.S citizens between the ages of 15-64 years have a well paying job. The recommended OECD estimate is 66%. Therefore, the rate of unemployment in the United States is lower compared to many industrialized countries. The situation has been improving in the past five years, despite several economic setbacks faced by the country (Bloomberg Matthew Klein, 2013).
Poorer countries, especially in Africa, have experienced increased rates of unemployment in the past five years. The United States ranks high in the overall living standards. Quality education, for example, is a fundamental prerequisite for securing employment. In the United States, over 89% have attained a high school degree. These are people between ages 25-64 years old. Life expectancy is also high in the United States, at 79years, which creates a huge labor force. The following graph shows the rates of unemployment in countries of the world
Source: http://www.indexmundi.com/g/r.aspx?v=74
Understanding unemployment statistics in other countries will help the U.S understand a lot of underlying issues involved and/or related to their own unemployment rates. Comparing the U.S statics with those of other countries will for example help to see the shifts in relative performance of the market economy. This will give an indicator that there is need to change the existing way of doing things. Understanding U.S issues through other countries statistics is done through comparing consumer prices of goods, the real G.D.P per capita and per employed person, the productivity of each employed person in a country & the unit labor costs and the hourly compensation costs. All these provide an indicator of how the U.S is faring.
Developed or industrialized countries have minimum wage policies. Governments from most of these countries require all employers to adhere to this policy, and pay their employees at least the recommended minimum. Therefore, wages in such countries are considerably higher. In developing or poorer countries, the wages are relatively lower due to economic factors and lack of government control in wage allocation by employers (Ben Bernanke, 2012). Investors in developed countries opt to do business in less developed countries due the lower labor costs. Employing and paying workers in a lower wage country cuts the company’s overall costs; this enables them to expand faster.
Conclusion
The United States has taken a lot of measures to monitor its economic progress in unemployment issues. Comparing with other countries is part of that measure. Continuous monitoring of international unemployment trends by the BLS will continue to provide valid data that is vital in maintaining a stable economy by U.S.
References
Ben Bernanke (March 2012). Recent Developments in the Labor Market.
http://www.federalreserve.gov/newsevents/speech/bernanke20120326a.htm
Bloomberg Matthew Klein (April 2013). Why Aging Baby Boomers Don't Explain Jobs
Numbers. Available at http://www.bloomberg.com/news/2013-04-05/why-aging-baby-boomers-don-t-explain-jobs-numbers.html
Catherine Rampell (March 2013). An Odd Shift in an Unemployment Curve. NYT. Retrieved
March 2013.
Current Unemployment Rates for States and Historical Highs/Lows. BLS. 2012-06. Retrieved
2012-06-15.
Schwabish, Jonathan (August 22, 2012). Fiscal Tightening in 2013 and Its Economic
Consequences. Congressional Budget Office. Retrieved August 28, 2012.Cha, J.M.
(December 7, 2012) "Why is Washington Reducing the Deficit Instead of Creating Jobs?" Demos Explainer
Unemployment Rate. Bureau of Labor Statistics. Retrieved October 6, 2012.
Schwartz, Nelson (March 3, 2013). Recovery in U.S. Is Lifting Profits, but Not Adding Jobs.
New York Times. Retrieved 18 March 2013.
