WHY US UNEMPLOYMENT RATE IS SO HIGH

why US unemployment rate is so high

why US unemployment rate is so high

Introduction

The unemployed are all people looking actively looking for jobs who have not yet found one (or not yet found one that they find attractive enough to take rather than continue to look for a better). The number of unemployed divided by the total labor force--the unemployed plus those people at work--is the unemployment rate. In the United States every month the Labor Department's Bureau of Labor Statistics conducts the Current Population Survey: a random survey of America's households. The estimated of unemployed from the survey is then divided by the estimated labor force from the survey, and the result is that month's unemployment rate. Last month's unemployment rate is usually the biggest single piece of economic news when it is released, on the first Friday of every month. An economy with no unemployment would not be a good economy.(French,1997)

Discussion

Just as an economy needs inventories of goods--goods in transit, goods in processes, goods in warehouses and sitting on store shelves--in order to function smoothly, so an economy needs "inventories" of jobs-looking-for-workers ("vacancies") and of workers-looking-for-jobs ("the unemployed"). An economy in which each business grabbed the first person who came in the door to fill a newly-open job and in which each worker went and took the job associated with the first help-wanted sign that he or she saw would be a less productive economy. We want workers to be somewhat choosy about what jobs they take--to be willing to think that "this job pays too little", or "this job would be too unpleasant", or "when the employers find out how unqualified I am to do this they will be very unhappy." (French,1997)

Throughout most of the 1980s, USA's job loss rate has consistently been about 2 percentage points higher than in the UK. The gap evolved in spite of very alike financial performances over the two countries: the development rate of genuine per capital earnings has been effectively equal since 1976. However, now, well into the 90s, the gap has broadened much more significantly. In the last five years, the United States mean has really dropped from 6.7% to 6.5%, with a present rate of 5.2%, while the American rate has and still continues at 9.4%, with a present rate of 9.7%. This considerable distinction in USA's job loss rate can be attributed mostly to the security snare which the government presents, encompassing bountiful payments of job loss protection and other communal services; but furthermore to the high payroll taxes; and the under accomplishing American economy. There is no lone cause for the continual gap in the job loss rates of USA and the U.S., but rather a blend of the overhead factors. 'No humanity can be flourishing and joyous, of which the far larger part of the constituents are poor and miserable.'(Gordon,2004)

This is the idea behind the creation of communal services for example unemployment protection and welfare payments in numerous ...