Unemployment is an economic situation where individuals who are actively seeking for employment are unable to be absorbed in the job market. Unemployment is normally measured through unemployment rate, where the number of unemployed individuals is compared with the number of individual in the labor force. In the U.S. the discussion concerning unemployment revolves around the causes of unemployment, as well as strategies to minimize unemployment. The U.S. has recorded a constant expansion of employment from the 1990s, but this trend has been interrupted twice during the Great Recession in 2001, as well as between 2007 and 2009.
Unemployment rates usually decline when countries are experiencing economic prosperity, but rise when a recession occurs. The U.S. unemployment rate has been on the decline since the end of recession in 2009. According to the Bureau of Labor Statistics, the unemployment rate in the U.S. stands at 4.6% in November 2016 (“Employment Situation Summary” n.p). This is a decline of 0.3% from October. The wage growth is slow, although it is above the inflation, and American consumers have been optimistic for nearly a decade since President Obama took over in 2008 (Cohen n.p). The jobless rate, as recorded in November 2016, is at its lowest level since the beginning of the global recession on August 2007.
Fiscal policy, which incorporates government spending and taxation, and monetary policy, which integrates adjustments of the interest rate by the U.S. Federal Reserve, contribute largely in the management of the unemployment rate. They act as economic exchange between unemployment and inflation. The Federal Reserve (the Fed) is quite positive that the current economic situation is under control, and is contemplating on raising the benchmark interest rate in the coming month to tighten the reserves (Cohen n.p). The Fed has the mandate to attain full employment while still maintaining a low inflation rate. The Fed has exercised fiscal policy to cut on cost, but the reaction is that a few jobs have been created while companies are unable to create more jobs owing to high taxation.
The main causes of unemployment in the U.S. include government sector layoffs in an effort to minimize its expenditure. Initially, government jobs were considered the safest in terms of security, but nowadays, no one can predict what would happen to him/her when the economy is hit by a financial crisis. The main cause of worry in the U.S. is that the full-time occupations are vanishing and are replaced by part-time jobs, as companies attempt to evade extra compensation for full-time jobs (Evans 157). Companies are facing a challenge of finding the right workers and how to maintain such workers. Equally, companies are unwilling to raise wages to point where sidelined workers can get a chance to join them. Globalization has contributed in the unemployment, as companies shift their operations to overseas countries to avoid regulations and minimize labor costs.
Unemployment rates are possibly the most appropriate indicators of the economic situation of any country. The U.S. Bureau of Labor Statistics has the mandate of releasing the official rates of unemployment every month. However, the decline in unemployment rates is overshadowed by the capacity to create jobs, and the persistent loss of full-time jobs. The action by the Fed to reduce the budget deficit has negatively affected the efforts to create employment. Apparently, one is tempted to ask whether the future would be bright for the American citizens. According to Cohen, the U.S. economy is in a better position than it was a few years ago, but the biggest challenge would be to maintain this level towards the future.
“Employment Situation Summary.” Bureau of Labor Statistics, Economic News Release, Dec. 2, 2016.
Cohen, Patricia. “President Obama Is Handing a Strong Economy to His Successor.” The New York time, Dec. 2, 2016.
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