Unemployment and the Actual State of the USA’s Economy

Unemployment and the Actual State of the USA’s Economy

Introduction

Unemployment is among the challenges facing today’s economy. Unemployment occurs when employed citizens are fired or quit their jobs to look for new jobs. However, unemployment does not necessarily revolve around quitting a job; it also takes regular economic changes. Technological progress, such as robots replacing employees in production industries, causes unemployment. When employed citizens quit their jobs and decide to remain unemployed without looking for new jobs, we no longer consider them part of the active labour force. According to the recent USA Bureau of Labor Statistics, there was little change of 4.0 percent in unemployment rates (U. B. O. L, 2018). Employment growth has been encountered in warehousing, hospitality and leisure, the transport industry, and business services. This paper shall analyze changes in unemployment rates and the labour force.

Labor Force Participation Rate to Understand the Country’s Actual Economic State

The estimated active workforce of the country’s economy represents the labour force participation rate. Mathematically, the active workforce of an economy is equal to people aged 16 and above, either employed or actively looking for jobs, divided by the summation of non-institutionalized and working civilians.

Labour force participation rate = (active labour force /civilian noninstitutional population)100

2008 labor participation rate

According to the Bureau of Statistics, the labour participation rate in the USA was 66%. During 2008, the participation rate was not the same across the races. For instance, Hispanics had the highest rate (68.5%), while blacks had the lowest (63.7%) (U. B. O. L, 2018). The participation rates for Americans had a continuous, long-lasting pattern, 66.3% and 67.0%, respectively (US BLS, 2022).

Change in Labor Force Participation Rate Since 2008 and the Implication to the Economy/ Unemployment Rates

A decline in the labour force is associated with unemployment rates. Since 2008, the labour participation rate has changed due to social, demographic, and economic trends. With the great economic recession, labour participation rates declined until 2013, when economic stabilization was at 63%. According to recent statistics, the USA labour force is at 61.9%. The above changes in labour participation rates have led to a decline in unemployment rates. For instance, unemployment rates dropped from 10% in 2009 to 6.1% in 2014 (US BLS, 2022). A decrease in unemployment rates has led to overall economic growth and development.

How to Measure and Report Unemployment

USA unemployment rates are measured through a standard rate denoted as U-3. Through the U-3 measure, a citizen is considered unemployed if they do not possess part-time, full-time, or temporary work but are actively searching for work and are available for employment. Active citizens looking for jobs are those trying to obtain jobs. Unemployment can be reported when layoffs and jobs quit looking for new jobs (U. B. O. L, 2018). Citizens who have been actively seeking jobs for 12 months and not within the preceding 28 days are not part of the participant’s workforce, thus, considered employed or unemployed.

Discouraged Workers and How They Are Considered/ Measured

Discouraged worker refers to a citizen who qualifies to be employed but is currently unemployed and has not tried to look for a job in the last 28 days (four weeks). Discouraged workers have found better options or are tired of looking for jobs. Discouraged workers are not considered unemployed, but they fit in U-6, U-5, and U-4 measures because they are no longer interested in looking for jobs (US BLS, 2022).

Changes in the Number of Discouraged Workers Since 2008 and How It Affects the Unemployment Rate

With economic recessions, the number of discouraged workers first increased in 2008. For instance, according to the Bureau of Statistics, the number of discouraged workers rose to 2.8 million citizens, has recently dropped back to 2.4 million citizens as per the news. Discouraged workers who are tired of looking for employment have been mistakenly considered part of the unemployed workforce (U. B. O. L, 2018). They are mistakenly taken as unemployed, thus making it difficult to measure and report unemployment rates.

Explanation of Significant Types of Unemployment

The significant types of unemployment include structural, cyclical, and frictional unemployment. Frictional unemployment occurs when employed citizens leave their jobs and look for new jobs together with new job seekers entering the job market for the first time. Frictional unemployment occurs naturally, even in developed countries. Cyclical employment is a result of ups and downs in the economy. With cyclical unemployment, unemployment rates are high during economic recessions and low during the boom. Structural unemployment is a result of the economic shift. Structural unemployment occurs when the available workforce does not match the required skills. The skills available do not match with what companies need.

Policies to Deal with Unemployment

The following policies should be applied to reduce unemployment rates for overall economic growth. The state should encourage the education and training of youths to reduce structural unemployment. Educating and training youths in relevant fields to fit in the required market workforce can help to reduce structural unemployment. The government should encourage investment in depressed areas by subsidizing them to reduce cyclical unemployment. Occupational mobility should be reduced to reduce frictional unemployment. Other policies include lowering wages to reduce real wage unemployment, flexible labour policies for easier hiring and firing of workers, and reducing interest rates to increase total demand.

Suitable Economic Policy to Deal with Unemployment

Economic growth reduces the rates of unemployment. Maintaining high levels of demand will create new jobs. Investment in depressed areas will also create jobs. Besides, encouraging new investments and innovations will develop new products that require a new workforce, thus creating jobs.

Benefits Associated with Unemployment Insurance and the Duration

Unemployment insurance programs protect employers against the loss of income during unemployment periods. Insurance agencies enable employees to meet basic needs during unemployment seasons without struggling or doing jobs below their professionalism. Generally, insurance agencies enhance economic stabilization during recessions. The unemployment insurance fund for eligible employees lasts for 26 weeks (U. B. O. L, 2018). The most devastating thing is expiry before the unemployed person in question gets a new job.

Importance of Workers Union and Implication to the Economy

Labor unions play vital roles in employees, such as working hours limit, campaigning for good working conditions, workers’ unity, bargaining powers, and overall well-being through decision-making participation. Workers get enough money to cater to their basic needs through union bargaining powers (U. B. O. L, 2018). Savings resulting from reasonable payments are invested for overall economic growth.

Summary of the Findings

• Unemployment does not necessarily revolve around quitting a job; it also takes regular economic changes. Technological progress, such as robots to replace employees in production industries, causes unemployment.
• Discouraged workers who are tired of looking for employment have been mistakenly considered part of the unemployed workforce. They have mistakenly taken the unemployed, thus making it difficult to measure and report unemployment rates.
• USA unemployment rates are measured through a standard rate denoted as U-3. Through the U-3 measure, a citizen is considered unemployed if they do not possess part-time, full-time, or temporary work but are actively searching for work and available for employment.
• Encouraging new investments and innovations will create new products that require a new workforce, thus, creating jobs.
• Unemployment insurance programs protect employers against the loss of incomes during unemployment periods. Insurance agencies enable employees to meet basic needs during unemployment seasons without struggling or doing jobs below their professionalism.

References

US BUREAU OF LABOR STATISTICS. (2022). U.S. Bureau of Labor Statistics. Www.bls.gov. http://www.bls.gov/home.htm

U. B. O. L. STATISTICS (2018). Employment situation summary. United States Department of Labor. [Online] Available from: https://www. bls. gov/news. release/empsit. nr0. htm. [Accessed 17/08/2020]. https://static.poder360.com.br/2022/01/Relatorio-da-BLS-de-Dezembro-2021-M13-Results.pd

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For this assignment, you should use the information in the textbook and the information found on the official Department of Labor website: http://www.bls.gov/home.htm.

Unemployment is one of the major concerns that people have in today’s economy since losing one’s job can be one of the most devastating events a person can experience. But what do the numbers actually mean? What is the actual state of the economy in terms of its ability to generate jobs for its citizens?

Questions:

What is the labour force participation rate? What was the labour force participation rate in 2008? How has it changed since 2008, and what does this change imply for the state of the economy? Does the labour force participation rate affect the unemployment rates reported in the media?
How is unemployment measured and reported?
What is a discouraged worker? Are they included in the basic unemployment rate? Are they included in any measure of unemployment? How has the number of discouraged workers changed since 2008? How does the exclusion of the discouraged worker affect the basic unemployment rate reported in the media?
What is frictional unemployment? What is structural unemployment? What is cyclical unemployment? What economic policies should be used to deal with these types of unemployment? Which type is most prevalent in today’s economy?
Unemployment insurance is designed to help the unemployed. Do these benefits encourage or discourage a person from looking for work? How long should these benefits last?
Does the existence of unions help or hurt the overall economy and the employment rate? Why or why not?