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    How Unemployment Affects the Economy

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    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 havesimply 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 plainlyclear 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 excessspending, 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.

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