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Unemployment

Unemployment occurs when people actively look for work in vain for last four weeks as per the definition of the international labor organization. There are a number of causes of unemployment in the US. The fact that the population of the country is growing is one major reason that has caused the increased rate of unemployment. While the populations are rapidly increasing the jobs remain constant and if they do increase their rate of increase is far much less as compared to the increase of the populations (Tucker 294).

Another factor is the outcome of the stiff competition from outside countries that most American firms are facing. Some of the firms may not be able to withstand the competition thus they are closed down. When such companies close down, their employees lose their jobs and thus end up being unemployed. There is also the current perception that is being implemented by the American firms whose view is that it is smother to operate businesses with flatter structures that to operate those business with tall structures. Such firms take the steps to flatten the tall structures and thus the firms engage in de- layering which is a process that leads to severe erosion of unemployment (Hurst 28).

The other cause of unemployment is automation of the facilities of production by most American companies at the present. Those people who were undertaking particular activities are replaced by machine causing a large number of people to be unemployed. This form of unemployment is called technological unemployment.

Another reason is the results of the seasonal products. Seasonal products are produced by some firms meaning that products of certain companies are used only during specific seasons. Those that are employed in such firms lose their jobs during the seasons which the company is not producing the goods or has decreased the rate of production. This type of unemployment is known as seasonal unemployment.

The minimum wage in America is 6.55 dollars per hour which some people consider very little and as result people choose to remain unemployed rather than work for such a wage. This too leads to unemployment. Most of the US companies base their operations outside US because the wage rates outside are lower for example in the south Asian countries. Thus the potential employment is reduced. Another case in similar operation would be where the companies already operating in the US are subcontracted to the companies based in the Asian region thus leading to severe loss of jobs (Tucker 295).

Another cause of unemployment comes up when youngsters chose further studies other than taking the jobs. Many companies in America encourage multitasking thus a single person undertakes so many jobs which could have been undertaken by several people thus shutting them from employment.

The means by which a country adjusts the levels of its spending so as to monitor a nations economy are knows a fiscal policies. All the causes of unemployment are rooted to the decline of the growth in the economic growth. Thus unemployment can cause decline in the economy of a country and when this happen there is further depression in the economy. The fiscal policies go hand in hand with monetary policies.

The fiscal policies work to influence the economy by increasing and decreasing levels of tax and in turn increasing or decreasing public spending. This is meant to curb inflation and in turn increase employments opportunities while maintain a very health value of the money in circulation. However, the government always has to strike a balance because when they stimulate a stagnant economy, they are running the risk of the rising inflation. This happens because when there is an increase in supply of the money, which is followed by an increase in the demand by consumers, a decrease in the money value may result meaning that it will take much more money to buy something whose value is the same (Boyes, Melvin 282).When the economy is slow the levels of unemployment shoot up, while consumer spending goes down and in this case the businesses are actually not making money.

The government may decide to take measures that will fuel the economy’s engine through a decrease in taxation which gives consumer more money to spend at the same time increasing the spending of government in form of buying some services that are offered in the market such as building of roads. When the government pays for such services it creates jobs and wages which are then pumped in the economy. This process of pumping money in the economy is called pump priming. Thus, through this, the levels of unemployment decrease.

When there is more money in the economy and there is less tax to be paid, the consumers demand for the goods and the services in the market increase. This will rekindle the business and in turn the cycles changes from stagnant to active. However if the process doesn’t have reins an increased productivity of the economy can go to fine lines which can cause too much money circulating in the market (Boyes, Melvin 283). This in turn can cause the value of money to go down and the prices of the goods whose value is the same goes up. Thus inflation will occur.

The economy needs to be slowed down when the inflation is too high. The government will thus use the fiscal policies so as to increase the taxes thus sucking money. The cycles continue because fiscal policies could also be dictating a decrease in government spending.

With efforts, the US government is making to curb the inflation rate it is likely going to have a decrease in the rate of unemployment which however may take time since the cyclic fiscal regulations put in place as seen above sometimes work to the opposite. Thus if the rate of unemployment is to make a significant decrease in the US, it will not be as soon as June 2011. June 2011 would be too soon for the only government tool which is the fiscal policies that take years to realize stabilization and not just a night.

Works Cited

HYPERLINK “http://www.google.co.ke/search?tbo=p&tbm=bks&q=+inauthor:%22Irvin+B.+Tucker%22&source=gbs_metadata_r&cad=9″Tucker, Irvin. Survey of Economics. United States: Cengage Learning, 2008

HYPERLINK “http://www.google.co.ke/search?tbo=p&tbm=bks&q=+inauthor:%22Michael+E.+Hurst%22&source=gbs_metadata_r&cad=7″Hurst, Michael. The assimilation of immigrants in the U.S. labor market: employment and labor

force turnover. United States: Taylor & Francis, 1998

HYPERLINK “http://www.google.co.ke/search?tbo=p&tbm=bks&q=+inauthor:%22William+Boyes%22&source=gbs_metadata_r&cad=8″Boyes, William. And HYPERLINK “http://www.google.co.ke/search?tbo=p&tbm=bks&q=+inauthor:%22Michael+Melvin%22&source=gbs_metadata_r&cad=8″Melvin, Michael. Economics. United States: Cengage Learning, 2006.