The article by Casselman Ben titled the rising unemployment rate is good news argues about the positive effects of the rising unemployment rates for the overall economy. The majority would find this statistic data as a bad news, but it has positive impacts on the overall economy. The article is presenting the raising of the unemployment rate from 4.9% to 5%, which results in the space the market has in order to keep improving. The reason why the increased unemployment rate benefits the economy has been given since “the government counts people as unemployed only if they are actively searching for work” (Cassleman, n. p.). The number of unemployed workers has decreased and the number of jobs has been increasing. The country will not run out of available workers since there are a vast number of citizens who are currently not looking for jobs. The ones who are joining the labor market have no difficulties in finding work. The article provides statistical data with graphical presentation for the current and past trend of employment in the country. The wages have been growing, along with the rising employment ratio among the prime-age workers and job growth, but have in some segment not reached the prerecession stages.
The fact that new jobs are being created is showing that the economy is expanding. Low unemployment causes more demand for the labor market and increases the wages on the labor market. The rising employment ratio means fewer people without job and more available income to spend or put into an investment. The rising of employment ratio has an impact on the overall economy. The more taxes are being collected with more spending without the worrying about the personal finance. With high national debts after the crisis the tax revenues will help to achieve the financial stability of the system. The correlation between the inflation and unemployment can be observed from the article, which supports the theory that when unemployment falls the workers are empowered to gain higher wages. The article reported of increased unemployment rate, but this means only that more people are actively seeking jobs and when they enter into working market they do not encounter problems of finding a job. The unemployment and inflation rates have been correlated and hence, when the unemployment raises the inflation rate falls. The wages can be negotiable because there is not vast number of people on the job market looking for a job and this means the employers cannot easily replace workers. The greater pool of workers is resulting in higher competition and hence the growth of the wage is not big, but it is still increasing. This can be seen from the graph of hourly earnings change from previous years presented in the article. The hourly earnings are rising 2.3% faster than inflation. Higher wages can contribute to the rising demand, which can further result in the increased prices of products to market which is seen as rising inflation. With the lower unemployment providers of goods and services can increase prices for product that are in higher demand. Today the opposite of the deflation, which is negative inflation, is seen. This means that the prices are not falling because the supply of goods is not higher that the demand for goods. The deflation can result in reducing prices and can be one of the factors that contribute to the increasing unemployment rate, with companies making less money and cutting the costs. Further deflation is seen because the individuals without jobs are cutting their own expenses and with this they are spending less. The labor-force participation rate shown in the article is way below in comparison to the pre-recession time, which means that the proportion of the population that was economically active is lower than it was prior to the year 2000. The rate is showing the proportion of the population that is active in the market or is actively searching for a job. This rate is a result of the ageing population in the United States, since more people are retiring which is decreasing the participation labor rate. If more people are retiring as entering the work force market the labor force participation ratio will decrease. All in all, unemployment indicators are one of the most important economic indicators. The high unemployment rate can result in the economic loss.
Work cited
Casselman, Ben. The Rising Unemployment Rate is Good News. 2016. Web. <http://fivethirtyeight.com/features/the-rising-unemployment-rate-is-good-news/>
