Unemployment in America

Wayne / 2019-04-18


Unemployment, also called joblessness, is a state in which people do not have work yet they are diligently looking for jobs. Studies indicate that the biggest victims are the young people who after completing school do not find employment. The unemployment rate, which is stated in percentage form, is determined by dividing the total number of jobless people by the total number of those with jobs. According to research, in many nations, unemployment rates go up during times of recession. Such a situation was witnessed in 2011 when more than 200 million people worldwide found themselves jobless due to shrinking economies. (Frenkel and Ros 631-646) America is one the most developed nations around the globe with a comparatively steady economy. In spite of this, there is a substantial rate of unemployment across its population. The issue has angered the people of US, and politicians use it as a weapon to fight each other at the time of political campaigns. The aim of this paper is to examine the causes of unemployment in America and the issues surrounding the issue.

How Unemployment has grown recently

Despite being known as the world’s superpower, the US population consists of many individuals who lack employment. Reports indicate that about 13.9 million American citizens are jobless and that this figure only represents those searching for work. It is said that the total number of unemployed US citizens is greater than the entire population of the state of Illinois which is fifth largest countrywide. This rate of unemployment means that if the unemployed people were to form a country, it would become the 68th largest nation on the globe, which would surpass the population of Greece and Portugal, which is 10.8 million. (Ruprah and Luengas 59-66) This elevated unemployment rate observed in America has majorly been attributed to the diminishing growth of the economy that has been witnessed in America after the world financial crisis. However, the American government has been striving to form policies to aid in improving the economy in order to create employment for the jobless in the US. Indeed the rate of unemployment has decreased after the introduction of an economic stimulus package by President Barrack Obama. Findings from the US economic survey, conducted in 2012, indicate that the average rate of unemployment since 1948 up to 2012 was 3.8%. In 1982, the unemployment rate hit the unprecedented high of 10.80%, with the lowest record of 2.50% in 1953. Nonetheless, the newest economic survey findings reveal that the unemployment rate in the US has declined and it was at 8.10% in August 2012 dropping from 8.30% in July and 9.10% in 2011.According to data from the Bureau of Labor Statistics issued in August 2012, the rates of unemployment varied from one state and district to another. (Beranek and Kamerschen 800-803) The information indicates that the state of Nevada is ahead with a 12.0% unemployment rate. It is followed closely by Rhode Island, California, South Carolina, New Jersey, and North Carolina at 10.8, 10.7, 9.6, 9.8, and 9.6 respectively. North Dakota, Nebraska, South Dakota, and Oklahoma were the states with the lowest unemployment rate at 3.0%, 4.0%, 4 % and 4.9% respectively.

Leading Causes of Unemployment in America

Economists have pointed out several reasons as the main causes of unemployment in America. One of them is that job vacancies are lacking in the US. Following the recent financial crisis, there was a decline in several new job openings to less than 3 million in contrast with more than 4.5 million new job vacancies which was the situation preceding the financial crisis in America and worldwide. Therefore, fresh graduates produced yearly missed out on jobs thus leading to unemployment. (Beranek and Kamerschen 800-803)Economists also assert that the rate of unemployment in the US is also due to the absence of real growth. The US economy has been hit hard for a long time the worst being witnessed during President George Bush’s rule. (International Monetary Fund 1).President Obama has been grappling to improve the situation, but it has not been successful. For instance, studies indicate that there were only 36,000 job openings in 2012 a number that was far less than what the economists had projected of not less than 150,000 new jobs to match with the steady increase in population. The unemployment rate has been the greatest debate among politicians, particularly from the Republicans who based on this to win voters on their side. They argued that Obama’s    leadership failed to overhaul the economy to create employment for a majority of young people in the nation who are suffering in poverty for lack of jobs. Economists further assert that China has played a key role on the unemployment seen in the US, saying China is seizing employment opportunities in the US in big numbers. They say that some policies adopted by China on their marked have lowered costs of labor. Consequently, some businesses have been shifted from the US where costs of labor are comparatively high to the China market. Because of this, the number of companies and businesses being created to provide employment for young people in the country has gone down. (Ruprah and Luengas 59-66)

Furthermore, economist asserts that spending money on trade deficit is also depleting the economy despite money being directed to other regions globally. In addition, it is noted that many of American organizations are confronted with stiff competition from foreign agencies, from such nations such as Germany, Japan, and China among others. Following this, it has become somehow cumbersome for these teams to deal with the stiff competition arising to financial difficulties. It is argued that these have compelled many organizations in America to close down. Consequently, former employees of these organizations are left jobless. Another argument by economists is that the growth of technology has contributed majorly to unemployment in the US. They point out that many organizations in the US are automatically operated. Machines have substituted many employees, thereby denying jobs to many people. (Mazza) As technology improves, it is projected that machines will replace many workers, and if no action is taken, the rate of unemployment will increase. Findings also reveal that some American citizens choose to remain unemployed because they regard the minimum wage rate of 6.55 dollars hourly as too little pay compared to what they would be paid were they employed in other nations in the Asian market. This also has resulted in unemployment in the US today.

Policies being proposed to solve Unemployment in the US

There are several strategies for job creation. However, there are  intensive discussions still going on about them, in regards to their new effect on corporate profitability, government debt, and severe environmental impact. Such policies include tax reform, infrastructure investment, trade, deregulation, health care cost reduction, carbon price certainty, education, training, and reducing the cost of hiring employees. There are several pros and cons of job creation discussions going on today. There are hot debates by experts from the political array concerning these policies. (Zhang 776-786)  Firstly, many experts recommend infrastructure investment such as upgrading the electricity grid and building roads and bridges. (Ruprah and Luengas 59-66) Such investments have in the past produced or supported millions of jobs following the offset of higher federal and state budget deficit. At the beginning of the 2008-2009 recessions, employees in the housing and construction industry were less than by 2 million. The US infrastructure was given a scorecard of D+ by The American Society of Civil Engineers. They recognized approximately 3.6 trillion dollars in ideas of investment by 2020.In November 2011, it was estimated that the increase in investment infrastructure would result in the creation of 1-6 employment opportunities for every 1 million dollars invested. (Zhang 776-786) This is to say that an investment of 100 billion dollars would create between 100,000 and 600,000 more jobs. President Obama proposed the American Jobs Act in 2011, which entailed tax breaks offset by taxing more on high income and, infrastructure investment. Nevertheless, it failed to get a floor vote due to lack of enough support in the Senate. In regards to the tax policy, cutting down the cost of employees also inspires employer to increase the workforce. Regulation on fiscal policy is executed by special tax incentives for hiring more employee, or Medicare payroll taxes or by decreasing the current Social Security. In 2011, the CBO projected that by providing more refundable tax credits to lower-income families or by giving, more aid to the joblessness and by decreasing employer’s payroll taxes would yield more employment opportunities for every dollar of infrastructure investment. President Obama proposed the decrease in the Social Security payroll tax on employees between 2011 and 2012 which increased the deficit by approximately 100 billion dollars while consumers were left to spend these funds. The American corporate tax ranks almost top globally. Nevertheless, U.S corporations are among the lowest spenders about GDP resulting from loopholes. Decreasing the rate and removing loopholes may render US businesses more competitive, but may increase the deficit. According to the Tax Policy Center, it was estimated in 2012 that decreasing the corporate tax to 20% from 30% would increase the debt by one trillion dollars in 10  years. Another policy proposed was to bring down the costs of healthcare. Businesses are bombarded with the ever creating healthcare costs for their workers. (Zhang 776-786) Several other nations do not place these costs on business but rather tax employees who remit their payment to the government for their medical bills. These expenses on businesses decrease the costs of hiring and maintaining workers. In regards to the carbon price certainty and the energy policy, research reveals that the burden of environmental regulations costs thousands of dollars per employee.US residents are divided between promoting the economic growth and protecting the environment. Rules that would increase the costs of coal and petroleum may affect the economy negatively but would offer incentives for proper energy investments by addressing the uncertainty of regulating the price of carbon. President Obama proposed a sequence of pure energy policies in June 2013.They constituted use of energy efficient businesses and homes, decreasing carbon pollution from power plants, raising the fuel economy standards and continued usage of clean energy. Upgrading the minimum wage would offer families with more money to spend in a period during which corporate is recording more profits yet they are reluctant to invest. Analysts argue that the high costs of employment are detrimental to hiring. Through in 2009, the lowest wage was 7.25 dollars hourly or 15,000 annually, beneath poverty level for some households. President Obama championed the increase in  the minimum wage during February 2013, from 7.25 dollars to 9 dollars by the close of 2015.The increase which would afterward be indexed to inflation, would automatically raise wages for 15 million employees and bring poverty and inequality to a decline. (Zhang 776-786)  Multiple economic types of research indicate that moderately increasing the minimum wage increases earnings and decreases poverty without threatening employment. Leading economists and public businesses have supported the growth in the minimum wage, partly because increasing purchasing power for customers and employee productivity will help to boost the economy. The minimum wage in the US was most recently raised to 7.25 dollars per hour in July 2009.In December 2013,21 states had minimum wages exceeding the Federal minimum, with Washington leading with 9.32 dollars. According to CBO reports in 2014, raising the minimum wage to 10.10 dollars hourly between 2014 and 2016 would reduce the workforce by approximately 500,000 jobs, and about 16.5 million employees would be paid higher. A little rise to 9.00 dollars hourly would lessen the labor force by 100,000, and about 7.6 million workers would be paid higher. (Mazza) Regulatory reform is also another policy under discussion in regards to unemployment in the US. Costs of regulation on business capital and going concerns are key. Laws requiring having end dates would assist to ensure that only rules are worthy get renewed. New investments make up about one-fifth of employment opportunities created but the number of new business created yearly decreased by 17% following the recession. Education policy could increase the number of families that can afford higher education and consequently qualify for better jobs. Nevertheless, school fees continue to be expensive for many US residents. Offering loans contingent on courses specialized in areas with employee shortages such as accounting and healthcare would solve workforce imbalances. The issue of income inequality also needs to be addressed in regards to unemployment. (Ruprah and Luengas 59-66)The economic growth of America is not resulting into higher median household incomes. Actual GDP per capita has gone up while the real median income per family has not, showing a pattern of inequality. Income inequality demonstrated by the unchanging wage for lower and middle-income households together with a change in the growth of revenue to those earning at the top can severely affect the growth of the economy because richer households tend to have more savings. What matters is the quality and the rewards on jobs and not merely the creation of employment. One factor that has contributed majorly to the higher income inequality is the decline of union movements. Strengthening the labor movement could assist to create better paying jobs, moving part of the economic pie from owners to workers. (Zhang 776-786) Moreover, by increasing employment costs. employers may opt to hire fewer employees. In regards to trade policy, establishing a level playing ground with trading partners could improve job creation in America. A difference in wages and living standards together with currency manipulation can create free trade rather than fair trade. If nations could let their currencies to move freely on international markets would minimize massive trade deficits, creating more jobs in advanced countries like Western Europe and the US.


It is clear that unemployment in America a significant social challenge. Therefore better policies and firm measures need to be established by the government to aid in reducing the rates of unemployment. Such can be attained by creating a favorable climate that enhances investment in the country, cut taxes on investments, and stabilizing the economy. When people remain unemployed, many of the young people will be tempted to engage in criminal activities which will make the current economic situation in the country worse. On a lighter note, advocates of globalization have pointed out that unemployment is seen to constitute a growing problem in America, the overall unemployment rate in the country is still low in comparison with many countries on the globeu