Running Head: UNEMPLOYMENT TRENDS IN THE UNITED STATES
Unemployment is the second macroeconomic problem or crisis from inflation globally (Valletta, 2011). Usually, inflation causes economic recession while unemployment is a healthy factor towards economic boom. Rising trends in unemployment levels in the United States is a macroeconomic crisis that needs to be addressed appropriately. An unemployed person is a person looking for work actively and he/she is available to work. Unemployment refers to an economic condition where people have no jobs, have actively searched for work in the last one month, and they are presently unoccupied and are available for work. In United States, people laid off for work and are waiting to be called back to work are also counted as unemployed. Unemployment trends are calling for strategies to counteract the coming great economic depression. Unemployment during economic downturn is sometimes referred by economists as healthy for economic recovery. Unemployment is costly to the economy. The difficult experience is solved by economic recovery. To estimate the impacts caused by unemployment United States labor bureau of statistics determine changes in economic indicators. Common economic indicators include consumer price index, unemployment cost index, employment situation factor, producer’s price index, real earnings, and the United States imports and exports prices index. The unemployment levels usually affect the key indicators such as the producer’s index and the consumer’s index. All these indicators are collected through random household surveys data throughout the country. Unemployment causes people to spend less causing recession. The condition contributes to reduced business revenues consequently leading to reduction in production output.
United State unemployment implies the number of people in percentage that are not employed in a period of four weeks. According to bureau labor of statistics (2011), unemployment levels in the country average 5.7 percent. Year 1982 is the highly recorded percentage level of 10.80, and lowly level recorded in history is 2.50 percent (Trading economics, 2010). Labor force in the country is sum of all unemployed citizen but looking for work and the employed. Non-labor force is the category of citizens serving in military, individuals institutionalized and the category not looking for jobs. Research studies conclude that the United States labor force has being decreasing from 1982 to present year. Decreasing in unemployment trends were affected by the recession periods especially 2007-recession period. As with most of the Atlantic and Caribbean countries, unemployment rates in the United States have been decreasing except in 2007 when it rose up due to recession. For example from 2001 unemployment level has being fluctuating but has never been more than 6.5% (Bureau labor of statistics, April 2011). According to Valletta (2011), “researchers have proposed explanations for rising duration based on the changing composition of the labor force and the unemployment pool and increased search duration as a response to widening residual wage inequality”. Conditions of unemployment during the past severe depression periods have being long. This condition is raised by the increase in the labor force that is lower than the exit rate of unemployed from the unemployment pool. Valletta (2011), argue that unemployment rates and duration period in the United States was worst experienced in 2007. The unemployment duration in this period reached rates of recession in the year 1981 to 1982. Further, he indicates that the relationship of the unemployment rate and the duration are evident for the past three decades. Changes of unemployment duration are affected by other factors such as the wages rates, skills advancement, technological levels and the labor market dynamics. The factors fail to match with the increasing change in welfare.
Financial crisis of 2007 hit strongly the United States labor markets. For example, the country’s unemployment rate doubled from 5 percent on December 2007 to 10% in the year 2009. The rate reduced significantly in the year 2010. Global financial crisis caused regional imbalances affecting the movement of labor force and wage rate dynamics. Financial crisis hit hard the country’s levels of production, and consumption. Different categories of groups of people in United States were affected differently by the unemployment caused during financial crisis phase.
United States unemployment levels, durations and rates show many differences compared to other European or American countries. Especially in the year 1982 where there was a global economic downturn, United States experienced the hardest hit, longest depression and highest unemployment rate. Further, unemployment rates in United States were higher than European countries in the Second World War and have decreased considerably for the past three decades. Presently, according to Bureau labor of statistics, (2011) unemployment rates declined in the year 2010 and the first quarter of 2011. All the thirty-four states recorded a significant decrease in unemployment levels (Bureau labor of statistics, 2011). Possibly the decline in unemployment rates for the last decade can be attributed to the increase in productivity and output. Similarly, the wage rates behaviors and the relative employment rates in the country have a positive relationship. Wage rate increases with increase in productivity, increasing employments and subsequently decreasing the unemployment level.
Unemployment reflects the number of citizens unemployed and remains without work for a period of four weeks and they are active job seekers. Unemployment levels recorded today nevertheless differs significantly to levels recorded in the past years. Unemployment rates and duration rose shapely in the country following the year of 2007 financial crisis. The country’s unemployment trends in the recession or financial catastrophe can be controlled by strategizing short-term compensation programs.
Bureau labor of statistics (2011). Labor Force Statistics from the Current Population Survey. Retrieved from http://data.bls.gov/timeseries/LNS14000000
Bureau labor of statistics (2011). Regional and State Employment and Unemployment-March 2011. Retrieved from http://www.bls.gov/news.release/pdf/laus.pdf
Trading economics (2010).United States Unemployment Rate. Retrieved from http://www.tradingeconomics.com/united-states/unemployment-rate
Valletta, R. G. (2011). Rising Unemployment Duration in the United States: Composition or Behavior? Federal Reserve Bank of San Francisco. San Francisco. Retrieved from http://www.ssc.wisc.edu/~mchinn/RV_duration_4-17-11.pdf
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