Unemployment and its effects, Economics, College Term Papers.com


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Back to Subjects - Economics

Unemployment and its effects

Unemployment and its effects Ever think about what happens to people when they loose their job? Where do they go? What do they do? How do they provide for their family? These are everyday facts about unemployment, one of the largest measuring sticks for an economy. Unemployment is an important facet of every economy. Although it may seem logical to keep unemployment rates as low as possible, that is not the case. If unemployment rates drop to far down, this may lead to inflation. The reason being that if there is a low unemployment rate then there will be a shortage of skilled workers, thus pushing employers to raise wages and benefits which will Over the years, there have been really high highs and really low lows when it comes to unemployment. Currently the unemployment rate is at it’s lowest in twenty five years. The booming economy has helped drop the unemployment rate to below four percent, which is the lowest since 1970. These low rates have been caused by many factors. Some of which include growth in the industrial output of the United States, a booming stock market, and some natural elements such as In order to asses the affects of these different factors on the unemployment rates, economists must have some type of system to estimate the unemployment rate. One major system that is used deals with the number of “help wanted” ads that are published. This process is a compilation of the number of help wanted ads that are measured in fifty-one major newspapers across the United States. These counts are then converted into an unemployment percentage through the use of an It is no secret that the goal of every country is to have a productive and stable economy. One which will allow it’s people to function and operate effectively. Currently in the United States, the economy is booming. This boom in the economy has lead to a decrease of about four thousand less new claims of unemployment per week. This drastically low rate has posed a problem for economists, inflation. “The Growth of demand has continued to outpace that of supply, as evidenced by a decreasing pool of available workers” (CRUTSINGER). This has led economists to believe that employers will begin to “woo” employees thus increasing prices and causing inflation. The goal for the federal government has now become to slow down inflation. There have been several different policies that have been proposed to meet this goal but the most prominent one Recently, the federal government has given many hints of a possible increase in interest rates. Mainly they have been hinting about an increase in the rates at which banks loan each other money which will in turn increase the rates at which the banks lend out money to the public. This plan of action is not being supported by everyone. Recently during a day of extensive trading on Wallstreet, the market had been doing really well. There had been a gain of 106 points for the day until the final two hours of trading when there was a drop of 124 until the market closed with a net drop of 0.64 points. This drastic drop in the market after the announcement of possible interest rate increases shows that the majority of investors do not support this policy. they are opposed to the increase in interest rates in order to control the inflation due to the low levels of unemployment. The main supporters of this policy is the federal government. The reason for their strong support of this policy is their fear of inflation. They feel that if they raise the interest rates then that will keep companies from “wooing” their employees thus keeping their prices at current levels. I believe that having a low rate of unemployment is a spectacular achievement for an economy. The lower the unemployment rate, the more people that are working which in turn help produce more for the country’s economy. The current policy proposals seem to be a bit unnecessary at the moment. With the current levels of unemployment being at the lowest in over three decades, the United States economy is booming. Things should be left the way they are despite economists fear of inflation. For under the current conditions, America will continue to shine from sea to shining sea. Bibliography:

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