Unemployment & the Economy

In economics, "a person who is able to work and willing to work yet is unable to find a paying job is considered unemployed" (Wikipedia, n.d.). Unemployment as a whole is determined by the number of unemployed workers divided by the total labor force. By labor force, I mean the total civilian population which includes both unemployed and employed workers. This will give us the unemployment rate for a given city, county, or country. Unemployment is a nationwide issue that had been plaguing our country for some time. Although in recent years, it seems that is a just a swinging pendulum. So, as we await the next swing which brings a surge of unemployment, I will analyze this ongoing dilemma. The following is a discussion of the different types of unemployment, economy and its effect on the unemployment rate, and a look into the benefits or services provided to the unemployed.

According to economists, there are four different types of unemployment. Seasonal unemployment is "a product of regular, recurring changes in the hiring needs of certain industries on a monthly or seasonal basis" (Boyes, 2005, p.167). One example that comes to mind is holiday "mall jobs". As the annual Christmas season rolls around, businesses have a high demand for additional employees to assist in the mass quantities of new and frequent shoppers. Additional examples include an increase in temporary employees during the ski season, or during the harvest season. The key word here is, temporary. A majority of the seasonal employees are just temporary, meaning that when the demand diminishes, the employees are gone. They are now considered "unemployed" in their transition to find another job. For this very reason, unemployment rates are "seasonally adjusted". The second type is frictional unemployment which is "a product of the short-term movement of workers between jobs and of first-time job seekers". This type of unemployment is uncontrollable in society. This is when employees leave one job and search for another. Many Americans have the admirable attributes of being ambitious, eager, and full of perseverance. We want to make more money, live in a better house, or drive a better car. Therefore, we strive to climb the corporate ladder. This entails leaving one job and seeking another. "It is a sign of efficiency in an economy when workers try to increase their income...by leaving one job for another" (Boyes, 2005, p.169). A third type of unemployment is structural unemployment, "a product of technological change and other changes in the structure of the economy". Structural unemployment means that the structure of one's job has changed; therefore, leaving employees to leave the workplace and seek other jobs. For example, most recently in many supermarkets, there are "self check-out" registers. This type of device allows the customer to take the items they wish to buy, scan them, bag them, and pay for them. All of this occurs without any interaction with a customer service representative. If this type of "self check-out" device continues to develop throughout stores, there will be a lack of employees needed to meet the demands of the customers. Less "baggers" or "checkers" will be needed because we, as customers, can do it ourselves. This type of structural change forces employees to search for jobs elsewhere. The final type is cyclical unemployment which is "a product of business-cycle fluctuations". This type of unemployment has the most to do with the economy. Simply put, if the economy is good, there is a demand for jobs, and the unemployment rate can decrease. The reverse can occur if the economy suffers a recession or a specific catastrophic event.

There are two sides to the costs of unemployment. The side that directly affects the person who is unemployed, and the indirect way it affects the economy. An unemployed person faces many negative obstacles. Without mentioning, it is obvious that there is a severe financial loss within a household. Even with some of the services that can be provided, unemployment can put a traumatic hardship on a household and within a family. Without a paying job, there is also a loss of medical benefits. This means either very expensive doctor and hospital visits, or no visits at all. Additionally, there are psychological hardships as well. For many of the unemployed, there is a severe lack of social interaction. By going to work daily, there can be a large amount of social interactions and/or contact. Relationships can be formed which can in turn boost ones self esteem. Also, for many of the unemployed, there can be feelings of worthlessness, helplessness, and/or depression. On the other side, unemployment can affect the economy. Every man or woman's work contributes to the nation's economy. Logically speaking, every dollar an individual makes, it directly goes to that family's well-being, and indirectly back into the economy. "Unemployed workers produce no output. So an economy with unemployment will operate inside its production possibilities curve..." (Boyes, 2005, p.170).

Are there benefits from unemployment? Many economists say there is in fact benefits of people being unemployed. Keeping an unemployment rate in the nation helps to ensure that inflation does not accelerate. Unemployment can also provide many benefits to employers. Special interests always seem to dominate. Employers often like having their employees feel comfortable, but not too comfortable; meaning that the employers want to have the control over who has the jobs and who does not. This helps the employees working hard, striving for promotions, and their employer's wage demands are kept low. With unemployment, employers are maintaining control of their businesses, and in a way, the economy.

One important aspect to consider is the causes of unemployment. There are two things to take into account when identifying the reasons for unemployment. Voluntary unemployment is a person's personal decision to work or not to work. Due to personal decisions, a person does not actively seek employment. For example, a new mother may leave her corporate job to devote her life to being a full-time mother. Although to many this does seem like a full-time job, there is no monetary compensation. This woman has voluntarily made the decision to leave her job. She is considered unemployed. Involuntary unemployment will be the focus of a more in depth look. Many situations can occur that would cause an individual to lose their job. For example, mass lay-offs due to a decrease in the need for man-power, unethical business practices forcing corporations to shut down, monopolization, or high business competition forcing smaller businesses off the market.