The cause of unemployment is individuals being laid off or fired or they themselves quitting and seeking for an employment. In cases when the individuals are not in search of any job, they are not taken into the category of unemployed by the Bureau of Labor Statistics (U.S. Economy Added 215,000 Jobs In March; Unemployment Rate Rose To 5 Percent).
After many years of underpaid jobs, there is an assumption that Americans are finally demanding a raise. When we observe the last month, there was a significant pick up in the level of wages after having observed many years of limited gains though the unemployment was falling and the hiring system was healthy. This could be a sign that there is tightening of the job market just so enough for forcing the Companies for paying more to entice and hold employees.
Talking about the present status of unemployment in the country, the recent statistics suggest that there is a decline in the unemployment rate from 5% to 4.7%, meaning a decrease of about 0.3% (Matthews). The expected market rates were 4.9 percent. The reading is the lowest since the year of 2007. The number of people unemployed decreased by a number of 484,000 and the current figures suggest being 7.4 million. The participation of the labor force declined given the second month continuously. The United States unemployment rate reached an average of 5.82 percent from the year 1948 to the recent year of 2016. The highest unemployment rate recorded till date has been 10.8 in the year of 1982 and the lowest reported rate was back then in 1953, at 2.5%. The agency responsible for the reporting of unemployment rates in United States is the Bureau of Labor Statistics (United States Unemployment Rate | 1948-2016 | Data | Chart | Calendar).
There are two major types of unemployment namely frictional and structural unemployment, which are dominant in the US. The four major causes of frictional unemployment and two main causes of structural unemployment given the economy of the United States can be traced by studying the market.
One of the prime reasons for frictional unemployment is voluntary in nature. Some of the individuals who are unemployed become able to save adequate money for quitting jobs that are unfulfilling. There is luxury of searching new employment because of the savings so that the right opportunity can be waited.
The second reason is the movement of workers for unrelated causes prior to the start of a new job. The third reason is established as the entry of novel workers into the workforce. This comprises of fresh graduates from high school or college or other high degrees. They possess higher skills compared to the ones who have not attended school. This makes up to be a primary reason for unemployment in the youth.
The final and last reason may be the job seekers who are willing to re-enter in the workforce. They experienced a time in life when they ceased to look for employment opportunities. The inclusions of these are mothers wanting to rejoin workforce post their pregnancy and child growing periods. Other entrants may be those who have been married, settled and busy in their households, supporting their working spouses. The remaining ones needed to care for their elderly ones before they made an attempt to return to the labor force.
These four explain the causes for the frictional unemployment prevalent in the United States. These are the non-negligible parts of the process of job searching. These are the unemployment patterns that are short term in nature. The type of unemployment that exists in the United States is the structural unemployment, which has two main causes for its existence in this place.
The fifth cause of unemployment or the first cause of structural unemployment is involuntary in nature. Enhanced technology, like robots or computers swaps tasks of workers with company machines. Majority of the workers are in need of retraining so that skills can be obtained for getting a novel job.
The final cause of natural unemployment is job outsourcing. The example of this may be when a Company decides to move the manufacturing center to other nation. This is because the costs of labor are lower in the countries where the transfer has been done and the cost of living is lower. This happened in many of the states where the NAFTA was promulgated in 1994. Most of the jobs in manufacturing transferred to Mexico. This also happened to be the case when many workers in India and China were able to gain skills suitable for the American companies. These comprise the reasons for structural unemployment. This is the case when the skills or the requirement of income by the workers do not match the available jobs (Forbes.com. N.p.).
There are these six causes of natural form of unemployment. They continuously occur even in case of favorable economies. As per the reports of Federal Reserve, the rate of natural unemployment lies between percent of 4.7 to 5.8.
Good employment status and security are two of the prerequisites for a robust economy. For a nation that depends significantly on local and national income generated through the work of national and international individuals, investment on creating a lucrative employment scene is a must.
United Nations has been an eye candy for career connoisseurs all around the world. However, in the recent years, the ambitious eyes seem to have drifted and the country has not been gathering as much attention as it needs in the employment sector. Along with the local citizens, the economy is one sector that suffered extensively after a long time.
A robust employment sector, also sought to be the silver lining of any economy by many, has suffered somewhat jolts in the recent years because of the global economic recession and other reasons. The three major observable impacts, which could only be taken as the beginning of loss valuation are, decrease in the jobs created, negative goodwill in the international community and lack of skilled and desired manpower for recovery of the employment sector.
The sudden fall in the regular pace of finances and economy had left businessmen in major opportunity creators in huge losses. The Government and concerned agencies have not been able to tackle the mental obstruction in national and international labor force. The country itself lacks manpower for building the prerequisites of goodwill and security to take the unemployment rates to the lowest rate possible.
The combined impact of economic recession on United States and its complementing nations is sure to create aftershocks from all dimensions. From all that we know right now, the various campaigns that the national and international forums have initiated for the sake of employment promotion in US have assisted to subside the deterred goodwill. However, this may not still be enough to relocate the US employment scene, as the most loved working place.
With decisive impact assessment and proper planning for recovering from what the industry has been through, hopefully there will be lot more innovative services to offer to the desiring and capable labor force than just selling the names of our already created jobs and offers.
There is additionally another type of unemployment, called the cyclical unemployment, which exists in the US economy. This is the seventh type and is caused when the job supply is lower than the job demand. It is also known as the demand-deficit unemployment. Economic downturn is the main cause for its creation. Large scale of unemployment is created by this situation (Amadeo and Amadeo).
There is slowing of demand of consumers so that there is loss of profits for businesses. If there is no expectation that sales will be picked up in the near future, there must be lay off of workers. This is the happening during the phase of recession in any business cycle. The same process of business cycle causes cyclical unemployment. One of the latest examples being the 2008 financial crisis, there was rise in the unemployment rate by 25% given the population in 1929 in the Great Depression (Schwartz).
There are also assumptions that minimum level; of wages cause unemployment that is demand-deficit. Generally, it is observed that when the wage rates are too high, there is occurrence of demand-deficit unemployment. It is one of the arguments that does not support higher amount of minimum wage system. Businesses possess a labor cost that is fixed. When there is force that higher wages need to be paid per person, there must be letting go of other workers. In chosen industries that are price sensitive, this turns out to be true. However, maximum companies will be able to pass over the cost to their customers.
Works Cited
Amadeo, Kimberly and Kimberly Amadeo. "7 Causes Of Unemployment". About.com Money. N.p., 2016. Web. 9 June 2016.
"Forbes Welcome". Forbes.com. N.p., 2016. Web. 9 June 2016.
Matthews, Chris. "The Unemployment Rate Is 5%. Why Is America So Pissed?". Fortune. N.p., 2015. Web. 9 June 2016.
Schwartz, Nelson. "Wages Rise As U.S. Unemployment Rate Falls Below 5%". Nytimes.com. N.p., 2016. Web. 9 June 2016.
"U.S. Economy Added 215,000 Jobs In March; Unemployment Rate Rose To 5 Percent". NPR.org. N.p., 2016. Web. 9 June 2016.
"United States Unemployment Rate | 1948-2016 | Data | Chart | Calendar". Tradingeconomics.com. N.p., 2016. Web. 9 June 2016.
