Upcoming election topics, demands by citizens for job creation, and large numbers of the working class of the United States urging the increase in minimum wage standards reflect present-day concern regarding unemployment. In order to discuss such a broad and complicated subject, it is necessary to define the terms surrounding unemployment, present current statistics, consider the causes and influences on unemployment rates, and evaluate possible solutions to high unemployment numbers. In this way it may be possible to present an overview of the impact unemployment rates have on the economy of the nation. However, it is beyond the scope of this paper to examine how unemployment affects the culture of the United States in relation to education, social programs, and other government assistance. Current unemployment numbers in America are vitally important for maintaining a standard of living for citizens and for creating opportunities for advancement in technology and global competition.
Definition of Terms
Current Statistics
According to the United States Bureau of Labour Statistics, the unemployment rate as of May 2015 is 5.5 percent and the number of unemployed individuals is 8.7 million (Bls.gov, 2015); the creation of jobs in the year 2014 was the most improved since 1999 with over 200,000 positions opened every month (The White House, 2015). The Hamilton Project is sponsored by Brookings and offers suggestions on how to create an economic environment to support Americans (The Brookings Institution, 2015). Each month, it discusses the number of jobs needed to bring the United States economy to the level of employment before the recession while bringing into account the number of workers in the labor force. According to the Hamilton Project, it is necessary to create about 208,000 jobs every month to close the employment gap by the year 2020 (The Hamilton Project, 2015).
Causes and Influences on Unemployment Rates
According to a Gallup poll in 2015, Americans state that the creation of jobs is the most important priority for the government (Gallup, Inc., 2015). To realize how to lower unemployment, it is important to understand the causes of loss in numbers of jobs. There are a number of influences on the number of workers in the population, how long they are employed, and the amount of money they make in wages.
Economic Conditions
Rates of unemployment generally decrease when the economy is strong and increase when a recession takes place. As revenue from taxes fall, public finances become strained. When evaluating the influence of economic conditions, the impact may be based on short-term economic cycles or longer-term process reforms among industries (Bernanke, 2012). Cyclical unemployment is kept from becoming structural through the use of social safety nets, retraining in job skills, competition in the private sector, education, and reform in housing (El-Erian, 2011).
Global Competition
As companies seek to decrease cost of operations, offshoring has become a common practice for service and manufacturing jobs. Forrester Research projected that approximately 3.4 million service positions have moved out of the country between 2004 and 2015 due to lower costs of operations abroad with one-fifth of the workers in the United States employed in industries susceptible to offshoring (Levine, 2011).
Education
Traditionally, job seekers with the highest education had lower levels of unemployment with higher wages earned when working. On-the-job training also allows for the acquisition of the skills necessary to obtain and retain a position in the workplace. In addition, as technological advances push global competitiveness, college graduates are returning to school to stay current with corporate improvements.
Automation
The technological revolution in industry has replaced human workers with automated processes in almost every manufacturing process and many service positions (such as automated telephone answering systems). There have been arguments that creating the machines employs as many workers as are displaced, the viewpoint has been challenged (Kroft, 2013).
Demographics
Interpretation of demographic statistics is vital to understanding the true nature of the labor force. The population of the United States is increasing and a larger percentage of the Baby Boomer age group is moving into retirement or an inability to work based on health reasons. Many unemployed seniors have given up on finding jobs even though they are capable of working. Young adults in the 16 to 24 year old age group are not in the work force due to college enrollment but will become active after graduation.
Possible Solutions to High Numbers of Unemployed
Tax Reform
Solutions are offered from the various political parties: conservatives believe jobs are created by decreasing regulations and taxation while liberals state that stimulus spending by the government will yield the same results. If consumers are confident taxes will decrease or remain stable, spending will increase and businesses expand with the need for more employees. However, the national debt could increase which would eventually slow the economy. By reducing corporate taxes, competition would increase but the deficit would be negatively affected (Bittle & Johnson, 2012).
Reduction in the Cost of Healthcare
Companies required to supply insurance for employees face increases in the cost of doing business. Obamacare attempted to address the provision of healthcare for the employed without unnecessary burdening of corporations, but it has been generally unsuccessful and other solutions are being proposed. Investigation into lowering the overall cost of healthcare and profit margins of insurance providers may provide possible solutions.
Investment in Infrastructure
Discussions concerning improvements in the country’s infrastructure include the generation of jobs for skilled laborers without the high cost of college education. Building bridges, roads, railroad transport systems, and other investments have the potential to drop the unemployment numbers of construction workers by the millions. In addition, the improvement to the transportation system and other services such as the electrical grids would benefit all the citizens. Counterarguments states that for every $1 million invested in infrastructure improvement, only 1 to 6 jobs would be generated while reducing payroll taxes to companies and providing tax credits would provide more jobs per dollars invested (Elmendorf, 2011).
Promoting Higher Education
A major complaint of new college graduates is the relationship between decades of repayment for high student loans and wages earned in the marketplace. A way to promote more adults attending college is to make higher education more affordable and adaptable to the job market. Suggestions concerning debt forgiveness for accepting employment in hard-to-fill positions such as rural healthcare have been suggested, for instance. Tax relief for employers willing to train employees in transferrable job skills in lieu of a college education is an option, also.
Conclusion
The President’s Council on Jobs and Competitiveness was established in 2009 to present recommendations to increase employment opportunities in the United States. These initiatives included: 1) investment in infrastructure improvements, 2) promote education, 3) encourage the creation of corporate positions nationally and internationally, 4) push growth of small businesses, and 5) streamline regulatory processes to speed job growth. With bureaucratic and political debates slowing the making of decisions concerning job creation in America, the importance of lowering unemployment numbers is uppermost in the mind of the public. Complex relationships require careful planning and budgeting, but the resolution of the large percentage of unemployed Americans may be on the horizon.
References
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