American unemployment and the causes?
- tvLv 41 decade agoFavorite Answer
First off, American unemployment is quite low, currently at 4.7%, which is one of the lowest in the industrialized world and below average for the past 50 years. (Compare this to Britain: 5.4%, Canada: 5.8%, Russia: 5.8%, Italy: 6.0%, France: 8.1%, Germany: 8.6%, China: 9.5% Belgium: 11.1%)
Anyone who thinks that we are losing a net amount of jobs due to overseas manufactoring does not understand markets or economics. Yes, we are losing some jobs, primarily in low value added manufactoring (apposed to capital intensive manufacturing, where we are actually creating jobs), but the money saved on importing cheaper goods is spent elsewhere in the economy and creates jobs in these other sectors. (For instance consumers have saved a lot of money on clothing and electronics in recent years. Their prices have come down or at least not gone up as quickly as general inflation).
This is what happens as an economy evolves. In the 1800's when improved technology improved productivity so that a lot of people lost their farming jobs, did the country see a permant increase in unemployment? Of course not. The monet saved by the consumer on farm goos was then spent elsewhere -- in this case, on manufacturing goods. A similar thing is happening now. We have less manufacturing jobs, but the money saved is being spent on service jobs. And just not low paying retail jobs, but ont hings such as biotechnology, business consulting, healthcare, education, information services engineerign consulting, and so on. This is why, even though a much lower percentage of the population works in manufacuring, we still ahev a low unemployment rate. In the end, these new jobs pay more on average then the previous ones.
If we had tried to resist the change int he 1800's by putting in place laws that prevented manufactoring jobs from being created in order to protect farm jobs, we would be a much poorer nation taday as we would all be living on subsidance farms. Similarly, if we resist this change to services away form manufactoring, we will only be stifling our future standard of living and technological growth. If we want to be progressive, meaning actualy wating progress, we have to allow for this change to occur, even if there are some transisionary costs involved.
With that said, unemployment exists for the following reasons:
There are three kinds of unemployment: Frictional, cyclical, and structual.
Frictional unemployment are people quitting jobs, getting layed off, getting fired, moving, just graduating from school, reentering the workforce after having children, and so on. These people are unemployed only temporarily but still fit into the unemployment statistics.
Cyclical unemploymet is unemployment that occurs due to the business cycle. When there is a recession, there are people put out of work. The general economy is not experiencing this right now (outside of a few industries like home building and mortgage lenders). That is why we have a historicaly low unemployment rate right now.
Structual unemployment is when there is demand for labor, but the unemployed do not have the desired skils needed, or are just incompedident, lazy, or cant take any resposibility.
Assuming that there is not a recession going on, the cyclical unemployment does not exist, but there are always people who fit into the other two.
People change jobs all the time, for good or bad, and there is always a segment of the population that is lazy, incompedint, etc, and just cant hold down a job. These two reasons are why "full employment" is considered to be around 5% or so historically.
But what you have to keep in mind, is that a 5% unemployment rate does not mean 5% of the population can never find work. It includs the temporary people. The average time of unemployment is about 8 - 9 weeks right now.
Only about .5% - 1% of people fit whithin the long term structual enemployment who just cant get and hold onto jobs.Source(s): Having an economics degree / having a job as an economic analyst International unemployment data from the Dec 1st issue of the Economist
- ContentedLv 61 decade ago
The root cause of unemployment in this country is, I believe, corporate greed. Almost all of the manufacturing jobs - heart of the middle class - have been outsourced to foreign nations where the prevailing wages are very low. You will notice that the retail prices have not been reduced just the profits of the corporation. In the town I live in, all manufacturing has been outsourced to China at the loss of over 1200 American jobs. Is this right? Or is it corporate greed? The head of AT&T - a few years ago - laid off thoudands of hourly workers and was voted a bonus which was in the millions of dollars. Morally I do not believe this is proper, only greed.Source(s): My opinion.
- 1 decade ago
I agree with seaavee but the companies could use this terrible situation into a risky but good marketing strategy creating a All-American company even if the price is a little higher the people would buy the product.
- 1 decade ago
my opinion is the rich get richer and the poor get nothing