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Introduction
High rates of unemployment are referred to one of the biggest economic concerns in the United States. The number of unemployed people increases substantially in the periods of economic downturn. As Stater and Wenger (2013) ascertain, “the national unemployment rates averaged 9.5 and 9.0 percent in 2010 and 2011” (p. 2). The unemployment rate serves as an indicator of “a community’s socioeconomic deprivation as well as its social disintegration or disorganization” (Singh & Siahpush, 2016, p. 9). This indicator is strongly associated with income inequality as well as levels of poverty across the states. In this respect inequalities between high and low rates of unemployment influence the American population’s health status, especially during recession periods. Specifically, as Singh and Siahpush (2016) assert, the indicator of life expectancy “can be used to document both absolute and relative inequalities in survival between populations with low and high unemployment rates” (p. 2). For that reason, the US government must take measures to mitigate effects of unemployment on people’s socioeconomic and health statuses. The concept of unemployment in the United States has strong correlations with the economic downturn and affects the population’ life expectancy due to inequalities in the society.
The Concept of Unemployment in the United States
Individuals may become involved in three labor market states characterized as employment, unemployment, and inactivity. As Barnichon and Figura (2012) assume, “the flows in and out of these three states determine the unemployment rate” (p. 3). For instance, inflows stress layoffs, quits and entries to the labor force, while outflows correspond to finding a job and leaving the labor force (Barnichon & Figura, 2012, p. 5). The labor market states originate from a number of reasons which explain the US unemployment in the recession period and emphasize relationships between unemployment rates and life expectancy, which arise from inequalities in the society.
Reasons for Unemployment in the United States
A high rate of unemployment reveals one of the biggest concerns in the United States. This proves to be a difficult problem to analyze, because their reasons vary across the states. Among them are “aggregate demand, business uncertainty, and structural adjustment of the labor force” (Mian & Sufi, 2012, p. 1). Firstly, the aggregate demand explains that job losses are more frequent in the non-tradable sector in high leverage countries where there is a decline in sharp demand. Additionally, a high rate of unemployment relies on reduced economic and policy uncertainty. It is possible that companies might feel reluctant to hire individuals on account of financial uncertainty. Moreover, the structural adjustment of the labor force may result in high levels of unemployment, which is established by relocation of “displaced labor from overly-inflated housing, construction, and financial sectors to alternative sectors” (Mian & Sufi, 2012, p. 3).
It should be noted that the unemployment rate in the United States is characterized by fluctuations at cyclical and low frequencies. In particular, unemployment is linked to labor demand with regard to cyclical frequencies, whereas low frequencies explain labor supply factors, such as “the aging of the baby boom and a decline in inactive individuals’ willingness to work” (Barnichon & Figura, 2012, p. 2). With reference to cyclical frequencies, Mian and Sufi (2012) estimate that “4 million of the 6.2 million jobs lost between March 2007 and March 2009 were due to demand shocks” (p. 4). Additionally, labor supply factors, which present connection with low frequencies, correspond to labor demand.
US Unemployment in the Recession Period
The recession period emphasizes that inactive people do not feel inclined to join the labor force because of a lack of interest in market work, which raises the rate of unemployment. In this respect unemployment movements can be triggered by both company employers and employees. Specifically, the movements relate to hiring and layoffs on the part of employers, while quits, labor market participation decisions, and demographics highlight employee-induced unemployment movements (Barnichon & Figura, 2012, p. 6). In terms of the unemployment rate in the United States, the recession period of 2009-2010 indicated record levels at 9.6% (Singh & Siahpush, 2016, p. 2). The statistics proves that the number of the unemployed people rises significantly during economic downturn.
Sharp declines in unemployment rates during the economic downturn also rely on the weakness of household balance sheet. This highlights the collapse in consumption, which originates from the reduced income. This case in the United States is explained by an increase in household debt due to the rise in house prices before the onset of the recession period (Mian & Sufi, 2012, pp. 4-6).
On the other hand, unemployed individuals intend to stay in the labor force during recessions (Barnichon & Figura, 2012, p. 22). An interesting fact is that the decisions whether to remain in the labor force are more characteristic of prime-age women and young people. It should be noted that low leverage countries do not tend to suffer greatly from the problems typical of high leverage ones, like the United States. Nonetheless, if low leverage countries have employees who produce goods for high leverage countries, the former are likely to experience employment losses as well (Mian & Sufi, 2012, p. 9). It means low leverage countries also begin suffering from socioeconomic inequalities.
Relationships between Unemployment and Life Expectancy
The unemployment rate is closely connected with individuals’ life expectancy as an indicator which characterizes both health status and human development. The investigation held by Singh and Siahpush between 1990 and 2010 (2016) establishes that unemployed men and women live 4.5 and 2.9 years shorter in comparison with their employed counterparts (p. 7). This trend correlates with people’s reduced income and household debt, especially in the period of economic downturn.
The US government targets the issue of unemployment, because poverty and deprivation are likely to influence life expectancy although little attention has been paid to this issue so far. The economic downturn of 2006-2010 put the unemployed at a health and social disadvantage (Singh & Siahpush, 2016, p. 9). The recession disclosed poor labor market conditions, and the US Congress intended to extend benefits to unemployed individuals. Otherwise the unemployed felt significant cuts in income and welfare. The individuals suffered from “a sufficiently severe shock that welfare [began] to fall immediately” (Stater & Wenger, 2013, p. 2). What is more, Stater and Wenger (2013) ascertain that the unemployed suffer from a decline in welfare before they apply for benefits (p. 19). This situation is more characteristic of men and older employees, as the role of the breadwinner and conditions for the elderly population are mainly changed.
In this respect it is vital for the government to take efforts to mitigate the effect of unemployment on people’s life expectancy and consequently to avoid unfavorable effects of health outcomes. Therefore, socioeconomic inequalities, including high levels of unemployment, determine people’s health status, which should be thoroughly considered. Mitigation of adverse effects of unemployment highlights improvements in socioeconomic conditions. In this case development of the relevant social policies alongside with welfare support and social protection for unemployed individuals establishes conditions for an increase in life expectancy (Singh & Siahpush, 2016, p. 10). Nonetheless, long-term unemployment and inactivity are improper in this case, unlike skills development, job training, enhanced work environment, and improved incentives. These measures are likely to reduce health outcomes and thus contribute to life expectancy, which can eliminate inequalities between low and high levels of unemployment as a social determinant.
Conclusion
High rates of unemployment in the United States become especially evident during the economic downturn, and inequalities in the society explain the reasons why they tend to affect the population’ life expectancy. The major causes of unemployment are aggregate demand, business uncertainty, and structural adjustment of the labor force. Rates of unemployment also relate to fluctuations at cyclical and low frequencies, which highlight labor demand and labor supply factors respectively. Furthermore, the recession periods are characterized by high levels of unemployment, which are triggered by both employers and employees across the states. Weakness of household balance sheet is also typical of the economic downturn. Although the recession principally prevents the population from being actively engaged in employment, unemployed prime-age women and young individuals intend to stay in the labor force. Low leverage countries may suffer from socioeconomic inequalities if high leverage countries outsource their production processes. Additionally, high levels of unemployment affect individuals’ life expectancy, which means poverty and deprivation can diminish the population’s health status and human development. Therefore, the US government must take measures to alleviate the adverse effects of unemployment on account of socioeconomic inequalities.
References
Barnichon, R., & Figura, A. (2012). The determinants of the cycles and trends in U.S. unemployment. US: Federal Reserve Board. Retrieved from http://www.bde.es/f/webpi/SES/seminars/2012/files/sie1212.pdf
Mian, A. R., & Sufi, A. (2012). What explains high unemployment? The aggregate demand channel (Working Paper 17830). Cambridge, MA: National Bureau of Economic Research. Retrieved from http://www.nber.org/papers/w17830
Singh, G. K., & Siahpush, M. (2016). Inequalities in US life expectancy by area: Unemployment level, 1990–2010. Scientifica, 2016, 1-12. Retrieved from http://dx.doi.org/10.1155/2016/8290435
Stater, M., & Wenger, J. B. (2013). The immediate hardship of unemployment: Evidence from the U.S. unemployment insurance program. Social Science Research Network. Retrieved from http://dx.doi.org/10.2139/ssrn.1940453
