Unemployment as an economic factor

Unemployment as an economic factor

Unemployment is described as the lack of sufficient human resources to produce goods and services that are necessary for providing the needs and requirements of people to live normal and healthy lives (Chodorow-Reich, Coglianese, & Karabarbounis, 2019. Unemployment has caused more significant damage to the economic progress and performance of numerous countries. Unemployment also leads to damage to social activities, as most of them depend on economic resources. Therefore, measuring unemployment is essential for a country to develop strategic plans to contain unemployment and the impacts involved. The main essentials that people would lack in such situations include basic needs. In turn, it reflects on the poverty level of the country, and solving unemployment issues is essential for economic progression.

Therefore, the research will explore unemployment as an economic factor that involves individuals who are willing, available, and able to work for wages. However, because of the economic situation in society, people are unable to secure any occupational position in the market. The unavailability if work is regardless of their dedication in searching for jobs. It also identifies problems involved in the measurement of the unemployment rate.

Literature Review

The unemployment rates refer to the percentage of unemployed individuals in the population. It acts as an indicator of the economic health of a country. Typically, unemployment rises with an economic recession, as depicted during the 2007/2008 financial recession (Rivero, 2014). The increased unemployment affects the country’s economy resulting in a reduction in prosperity. Employment rates, as previously identified, indicates economic health; therefore, it is feasible to use the data to track business cycles. Reduced consumer spending directly affects business revenue forcing management to take actions that promote the decline of economic authority. The Great Depression of the 1930s recorded the highest unemployment rates in American history at approximately 25% (Rivero, 2014). Government interventions controlled unemployment rates, limiting it to 14% (Rivero, 2014). The 2008/2009 recession caused the unemployment rate to rise again to just over 10%.

According to the Federal Reserve, the limited increments, and decrease in employment rates addresses the notion, natural rate of employment. In the U.S., the Federal Reserve Bank identifies a 3.5% to 4.5% variation in unemployment rates healthy for the economy (Nunley et al., 2016). Nevertheless, unemployment in the country has negatively influenced the economy resulting in consequences within regional and local areas of society (Knight, 2018). Guerrazzi & Ksebi (2018), assert that unemployed people suffer the most because they have to find any possible means to provide for the requirements, which is stressful in many cases (Guerrazzi & Ksebi, 2018). Money is essential to meet basic needs; without a stable source of income, it is difficult to sustain the basic social and biological needs such as shelter and food, respectively.

Measuring the effects of unemployment is challenging as other nations extend their benefits to countries experiencing high levels of unemployment (Chodorow-Reich, Coglianese & Karabarbounis, 2019). Unemployment is increasingly affecting many societies across as the globe, with the consequences being felt almost by all countries. The measurement of unemployment is problematic as it does not account for occupational quality experienced by workers. Some consider part-time and temporary employment as occupations complicating the process (Guisinger et al., 2018). It is, therefore, difficult to measure unemployment because of missing such critical considerations.

Overall, the measurement of employment and unemployment presents governments with the opportunity to develop economic policies intended to benefit the entire country. Internationally, parameters are present that must be considered. Among them are the employee headcount and unemployment rates (Nunley et al., 2016). The basis for the terms is agreed on standards that enhance uniformity when comparing historical and current data. The data is also critical for countries exporting employment. However, the research identified that functional changes in the labor market are challenged by changes in the labor market as well as corporate policies.

Economic Analyses and Statistics

Economically people need to work to cater to basic needs and or their requirements in life; however, with unemployment, this cannot be achieved easily. There are various cases or situation that leads to it. Chen & Hou (2019), identifies these situations as unfavorable to the economy (Chen & Hou, 2019). Unemployment is equally shared with the general population, including all races, different ages. Therefore, a person’s place of stay does not matter when it comes to unemployment.

Underemployment is the measure of employment as well as labor exploitation in an economy where the labor force is assessed on its skill and experience utilization and availability of work. The issue of underemployment is problematic as unemployment rates; they both do not offer in-depth information concerning their positions. Some people are counted employed when working in places that offer a semi-skilled job and do not provide positions that one is qualified. Also, it does not tell what unemployment or underemployment means in the real context; the notion refers to the economic impact on other industries or the value of the currency. The information cannot be useful in comparing levels of unemployment for many years (Passinhas & Proença, 2020). Unemployment is universally acknowledged as undesirable for both the public and governments. The literature review has identified economists and academics, stating there is a natural level of unemployment in all economies and industries (Wulfgramm, 2011). Elevated unemployment rates have significant impacts on society, the economy, and the political environment (Chen & Hou, 2019). Different researchers on unemployment from the government and other bodies utilize various measures to calculate the level of unemployment in certain regions as well as in the entire world.

However, there are problems involved in using some of the measures of unemployment (Knight, 2018). One of the significant problems includes failure to account for the discouraged workers; the data on these group of workers are not included in the official rate of unemployment. It also ignores other marginalized groups of workers and does not capture the long-term rate of unemployment. Discouraged workers include those who have been seeking jobs for more than one year and not in four weeks before statistics are made. It is, therefore, essential to consider such problems when conducting an unemployment rate to ensure the accuracy and integrity of information in the long-run.

Conclusion

Different studies have identified unemployment as a big problem in the economy of all countries across the globe. One of the leading causes of these phenomena is the adoption of new technologies by many forms to replace the human workforce. Measuring unemployment is a critical issue that has been faced by many challenges, including disregard of discouraged workers. Unemployment is also the leading factor contributing to reduced economic development and access to basic needs among many people in society. People who are willing, able, and certified to work in various fields do not have jobs. However, ways of measuring this element are grounded with problems and errors of accuracy and integrity of data.