Unemployment 1
Introduction
Unemployment has been and continues to be a major concern for many, especially in its role in the growth of the economy. Most nations that have exhibited a rise in their economy have greatly cut down their unemployment rates, thus providing a wider base for the government to cash in on income tax and ensure less spending through unemployment benefits. In return, the funds meant for the unemployment benefits are allocated to other productive projects that help grow the economy.
COVID-19 has also played a major role in unemployment and the resultant economic depression of many nations. This is because the unemployment rates have gone high in almost every country, as companies have resorted to retrenchments and closing down (Heim, 2019). Many policies put in place, like the social distancing, have made many companies retrench people, thus increasing the unemployment levels to a resounding 15% (Heim, 2019). Compared with other EOCD nations, the US appears to be among the most hit because it decided to lock down the country later than its counterparts.
Literature Review
The literature identifies the causes, impacts, and the overall economic, social, and cultural ramifications unemployment has on various countries’ economies and, most importantly, the US. Many factors come into play regarding unemployment and the direct impacts on the economy (Clarice, 2019).
Market Dimensions
Supply and demand are the factors to be considered regarding unemployment. Most graduates find it difficult to fit in the job market because their skillset does not meet most companies’ demands (Heim, 2019). The consequent decrease in demand for the skills needed results in an increase in unemployment rates. This is more translated when the increase surpasses the increase in those that qualify for labor (Clarice, 2019). Many people’s outstanding skills result in unemployment since there is no demand for their skills by companies.
Educational Dimension
Establishing the field of study and the job demands in those fields are very crucial in addressing unemployment. These problems are caused by market saturation in one field, while other fields may lack qualified personnel to be employed (Amadeo, 2020). Therefore, it is important that those taking courses research and understand which fields require certain skills and have to major in those fields to create a balance and curd unemployment. Balancing the acquired skills with the demanded skills will help identify those markets that need to be addressed in terms of employment.
Effects on the economy
Most studies have indicated the direct link unemployment has on the economy of the countries. Most economies rely heavily on income taxes by their governments (Clarice, 2019). High unemployment rates mean that the workforce has to cater to the unemployed through high taxes imposed by the companies’ governments. The government spending on unemployment benefits creates ineffective resource allocation that deters the economy’s growth (Amadeo, 2020).
The COVID-19 pandemic
The introduction of the COVID-19 into the world has intensified the already existing unemployment menace. Most people have been retrenched, companies closing down as the government imposed the social distancing measures to curb the virus (Heim, 2019). This has led to many people losing their jobs and impacting heavily on the economy of the country.
Therefore, this research seeks to identify other means through which unemployment impacts the economies of the world and to address the loophole that was not covered in other related studies with the advent of the COVID-19 pandemic (Heim, 2019).
What is unemployment?
Unemployment is a broad term that refers to people seeking a job(s) and employable but has not found one or cannot get a job. It entails that individuals in the labor force are open to work, but they do not have a job. Unemployment also encompasses individuals waiting to return to their jobs after being laid off (Amadeo, 2020).
- How is it calculated?
The unemployment rate is used as a tool to measure employment in a region or country. This rate is calculated by dividing the total number of unemployed individuals by the workforce’s total number (Heim, 2019).
- Types of unemployment
There are many types of unemployment caused by various factors. The types include;
- Demand deficiency unemployment.
This kind of unemployment comes into play due to a decrease in the demand for the company’s services or products, resulting in the company retrenching some of its employees as it finds it unnecessary to retain a large workforce with limited roles available (Amadeo, 2020).
- Frictional unemployment
This is unemployment caused by individuals looking for jobs that satisfy their qualifications and meet their specific skills. It is characterized by workers who fall in between jobs (Amadeo, 2020). These individuals have recently quit their jobs or have been fired and seek job opportunities in an economy that has not experienced recess.
- Structural unemployment
This happens when individuals in a company no longer meet the skill sets required by the company or available jobs, or there is a hindrance in the geographical location of the place of work, and they cannot access it due to some restrictions such as not accessing visas for traveling (Amadeo, 2020).
- Voluntary unemployment
When a job is no longer financially fulfilling, and the worker earns less than their living cost, they decide to quit their jobs. This happens when an individual fails to match the cost of living and is incurring more on living than earning (Amadeo, 2020).