Unemployment has been a problem throughout the United States since the beginning of our economic structure. In the most obvious sense, unemployment means 'being without a job. ' The term unemployment is one description of the economic condition of a society at any given time. Low unemployment means the majority of the labor force is involved in, or looking for steady work. On the other hand, high unemployment is an indication of an economy in recession, or even worse. This implies that a sizable percentage of the labor force is not currently working.
Until they actually start working again, they will be counted in government data as 'unemployed' (Shapiro, 1996). The Bureau of the Census in the Department of Commerce collects and tabulates the unemployment statistics in the united states. Next, this information is given to the Bureau of Labor Statistics (BLS) which is held in the labor department. The BLS then calculates the unemployment rate and publishes the statistics. Every month, agents revisit a set amount of households all over the United States. Some economists criticize the government's method of calculating unemployment because it fails to include 'discouraged workers' in its data (Shapiro, 1996).
'Discouraged workers' include those who have looked for a job over a large period of time and have simply quit. For this reason, critics say, real unemployment may be extensively larger than one might think. Throughout the 1900's there has been numerous polls taken that shocked everyone. The unemployment rate for those who cannot read and write is dramatically higher than for those who can (Simons, 1989). Illiteracy is a hidden problem throughout the United States (Simons, 1989). Another poll taken showed that an estimated 23 percent of Americans can read a stop sign but cannot fill out an employment form.
Of those who can read and write, large numbers of adults cannot read and write past the fifth grade level (Zycher, 1995). How are people going to get a job if they are not even able to inform the company of their skills? Another interesting fact, is The severest deficient demand in the United States occurred during the Great Depression in the 1930's. In fact, at one point the unemployment rate had raised to twenty five percent in 1933. Fortunately, after world war one had begun the need for military had decreased the rate to as low as 1.2 percent (Reynolds, 1994).
On the other hand, most people did not even pay any attention to the unemployment rate, because the considered laziness to be the main cause. Several possibilities have been speculated, but none have been proven to be the single cause of high unemployment. It is plainly clear that there have been several problems that play a role when the unemployment rate increases. Indeed, the experience of the past several decades suggest that no simple, quick, or radical remedy can eliminate the multitude of choke-points that are strangling U.S. economic and political processes (Choate, 1986). Causes of unemployment can vary.
Some economists have defined several types of unemployment. One type is frictional unemployment. This is a temporary and unavoidable period of time where a person is out of the work force. According to One education way, 'There are always some people who are out of work for completely unavoidable reasons' (Shapiro, 1996, P. 151).
Another example, is when technological and other changes cause structural unemployment. There are also clinical changes in which changes in general business occur. 'Peak' is a period of time when spending amounts are extremely high along with employment rates. After a period of 'peak', activity consumers and business? reduce unemployment rates along with their spending levels. As this spending falls, other business firms begin to cut back on their spending.
As spending decreases, production goes into a phase of recession, in which the decline of the gross domestic product occurs. Without excess spending, the whole line of supply and demand is severely impacted. After the peak and recession phase, the economy enters its lowest point (Sharpiro, 1996). The factories and firms begin to operate at less productive levels. This, in turn, creates high unemployment. This phase is referred to as 'trough'.
The economy now enters another phase that impacts the unemployment rate. This phase is known as expansion. Now is the time of recuperating. During this time, business and consumers begin to increase their spending and production once again.
Unemployment rates begin to decline as more workers are hired onto the job force. This is where the economy brings itself back to normal. According to One Educated Way 'Despite the pattern of peak, recession, trough, and expansion; the principle story of economics history is growth' (Sharpiro, 1996, P. 150). This has been occurring throughout the United States since world war one. We have experienced ups and downs in our economy throughout the century. The federal government is promoting maximum employment, production and purchasing power.
Fortunately, the United States economy and other market systems have an ability to recuperate and decrease their unemployment rate. According to The high-flex society 'Numerous remedies have been offered' (Choate, 1986, P. 23). For example, we entered the expansion phase where the business and consumer spending began to increase. Therefore, conditions were bound to improve along with business production.
Eventually, the economy reaches a peak once again (Shap rio, 1996). Most expansion phases last about three to four years. Joblessness is at record lows, and yet people are staying unemployed longer (Lynch, 1997). According to, the SIRS Researcher 'the unemployment rate has fallen sharply since 1992' (Reynolds, 1994, P. 35).
The number of jobs has not been expanding particularly quickly. Polls taken show that employment has been growing about 2 percent a year since 1993-94. Then exactly how does the unemployment rate drop so much within a short period of time? Critics believe that consumer confidence has increased a sizable amount and they are becoming more picky. Business week stated that 'The picture does not get any better than this' (Korte z, 1997, P. 32).
The United States has fought each type of fought unemployment differently. There are several steps that can be taken to achieve low unemployment once again. These steps are also known as the fiscal point and the monetary policy. Fiscal point occurs when taxing and spending are used to regulate economic activity. In turn, this creates the economy to surge and forces the economy into an expansion phase. On the other hand, monetary policies include government policies that have had a great effect on the interest rates.
This also affects the quantity of the money within circulation. According to the SIRS Researcher, 'Some people believe the government must become the employer of last resort if an industry cannot use the nation's total labor force (Zycher, 1995, P. 46). Eventhough many of the European countries have this policy, The United States has not bothered to pay any attention to it. This is mainly because there is little to no backing on such a policy because federal budget deficits have become to much of a major problem. Choate, P. (1986).
The high-flex society. New York: Alfred A. Knopf. Ko retz, G. (1997). Help wanted by small business.
Business Week. August 25, 1997, pp 32. Lynch, M. (1997). Choosers not beggars. Business Week. September 15, 1997, pp 8.
Reynolds, A. (1994). Employment crisis: running out of willing workers. SIRS Researcher. October 24, 1994, pp 35+.
Shapiro, H.T. (1996). One education way. Colorado Springs: Junior Achievement Inc. Simons, P. (1989). Lets put America back to work. Chicago: Bonus Books.
Zycher, B. (1995). Minimal evidence. SIRS Researcher. June, 1995, pp 44-47.