Like any other state, or country, United States is also affected by unemployment. Unemployment rate refers to the number of individuals eligible or ready to work but have no job. This therefore, creates a surplus labor force; some of which are laid off from their jobs. The unemployment rate in US was last reported at 8.6 percent in November 2011. The United States unemployment rate since 1948 to 2010 has averaged 5.7 percent. However, in November 1982, unemployment rate was the highest 10.8 percent while May 1952 recorded the lowest rate at 2.50 percent (Jamie, 2011, p. 203).Unemployment in United State is caused by different factors including economic recession, outsourcing of employees, Iraq and Afghanistan wars among many other factors.
In US, labor force refers to the total number of people who are employed and those unemployed but seeking work. While on the other hand, non labor force entails those people that are not looking for work or job, those that are institutionalized and all those serving in the military. Therefore, with the current economic problems and recessions that have caught up with the world, United States has not been left out leading to an increase in unemployment. Amidst the economic recession, the unemployment rate in US in November recorded a slight drop of 0.4 percent clogging at 8.6 percent. The nonfarm payroll employment level rose by 120,000 with employment rates increasing in the leisure, and hospitality, retail, professional, business services and health care sectors (Clemente, Luis, & Antonio, 2005, p. 848). On the other hand, government employment rate continued to record a decline. For instance, the United States unemployed persons which was at 13.3 million was a decline by 594,000 in November. Furthermore, this saw the labor force in United States reduce by half the total drop of the people without jobs. Therefore, it is clear that indeed United State has experienced unemployment rates.
When it comes to the major work groups, the rate of unemployment of male adults fell by 0.5 percent to 8.3 percent in November 2011. The whites without jobs declined to 7.6 percent while women adults was at 7.8 percent, teenagers at 23.7 percent, blacks at 15.5 percent, Asians at 6.5 percent while Hispanic was at 11.4 percent. From this data, it is clear that unemployment rate tended to vary with the ethnicity and the gender. The level of male unemployed is higher than women and the blacks’ rate of unemployment compared with other ethnic groups. This statistics reflects some level of inequalities in the level of employment a situation that needs to be addressed by the government and the labor federations.
The high level of unemployment in US has been sparked by a number of causes. These series of events that has marred US has led to a vicious recessionary cycle that is commonly referred to as economic recession of 2007 or which is also referred to as financial crisis of 2007. For instance, in June 2010, the Bureau of Labor statistics, of the United States released data based on the census population putting the rate of unemployment at 9 percent. The continued financial crisis of 2007 which ran to 2009 to a larger extend contributed to the increased rate of United States unemployment rate. For the country to be stable its economic position should be stable and able to support the activities which are being undertaken. Borrowing from Adam smith and Alfred Marshall, predisposition on economy, that a good GDP is achieved when there is legitimate supply and demand curve meaning that, the products produced by the manufacturers should be paid by the consumers since the total products that are purchased in an economy make up the GDP. However, this principle is not pursued as huge volumes of goods are purchased with credit cards with money being paid at later stage. This scenario creates or leads to accumulation of consumer debts leading to a generation of artificial GDP. This unhealthy purchasing behavior then ushers in huge volumes of bad debts and bankruptcy making the credit card companies, lenders and even consumers to incur huge losses. The loss then spreads to all economic entities in the United States economy leading to many companies becoming bankruptcy leading to initiation of job cuts and layoffs. Therefore, the financial crisis witnessed in the 2007 to 2009 impacted to a greater level the increased rate of unemployment as many organizations instead of recruiting more staff, resorted to lay-offs as a strategy to salvage themselves from closing and incurring huge losses. Therefore, apart from the economic recession and financial crisis, other factors have contributed to the increased rate of unemployment in United States.
Another cause of the unemployment in United States was the real estate sector bubble. This sector has performed well from 1990s to 2001 recording a rise of 124% but with the introduction of second mortgages, lending, refinancing and unnecessary appraisal of prices led to huge losses by banks (Jan, Abdolkarim, & Van, 2009, p. 937). Furthermore, short sale procedures and foreclosed properties did not fetch good returns as expected as people refused to purchase or had defaulted their mortgage loans. This scenario, led to increased cases in which banks began filing for bankruptcy, an example being the Lehman Brothers, which was worth $600 billion in assets. Such actions initiated many layoffs leading to increase in employment among the US people.
Automotive industry crisis is yet another contributor or cause of the unemployment in US after the banking sector. The lending institutions which provided large volume of lending facilities in terms of loans and cars disappeared affecting the foreign exchange, international trade and the oil trade. Furthermore, the lapse of enthusiasm in the fuel trade between 2003 and 2008 drastically affected the level of fuel supply facilities leading to inflation in the costs of fuel products. This scenario led to losses in terms of sales and markets by the fuel companies, this led to a considerable number of people being laid off.
Outsourcing is yet another factor that affects employment in US. For instance, the increased rate of unemployment in the US economy is also attributed to the business practices where work is allocated to companies based in less developed economies in order to benefit from cheaper manpower hours. This practice has seen many of the employment opportunities given to other people locking out the US labor force from such opportunities. These actions have therefore, played a role in the US level of employment (Toshihiko, & Ayşegül, 2009, p. 200).
Two wars perpetuated by the Bush administration i.e. the Iraq and Afghanistan wars cost huge amount of money in supporting the numerous invasions. The total amount is estimated to amount to $78,430 billion. For instance, a military installation of Kandahar Air Field is estimated to have cost $ 780 million by 2009, with around $1.6 billion having been spent in Military installations in Afghanistan. 2003 saw around 248,000 troops deployed in Iraq which saw approximately $533.8 billion defense budget used in the foreign operation by 20101. This is a huge amount of money that would otherwise be used to revamp and revive the economic situation in US and foster employment among its citizens (Dale, & Éva, N2007, p. 327).
By November, the total number of people losing jobs and those that completed temporary jobs reduced by 432,000 to 7.6 million. While the number of long term unemployed people i.e. those outside employment for over 27 weeks clogged 5.7 million accounting for 4 percent of the total number of unemployed people. Furthermore, a decline of 0.2 % in the civil labor force participation rate was also recorded bringing it to 64 percent as the employment population ration remained at 58.5 percent having changed with little magnitude. There was also a drop of about 378,00 to 8.5 in the month of November with the number of people employed on part time basis due to economic reasons. The number of working hours had been cut or reduced since they were unable to find full time jobs.
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