Unemployment is a situation wherein people who are available and looking job are not able to join the workforce for at least 4 weeks. Unemployment rises during the recession periods and gets reduced when the economy prospers.
Unemployment in the economy puts great pressure on the federal government as the tax returns get reduced and the social security net costs increase. Employment rose to substantial levels in the US labour market after the 1990s, but slowed down with the recession years of 2001, and 2007-2009. Since, then employment rates have risen and unemployment reduced and currently the unemployment rate in US, is 5.5% (May 2015). For most of the Americans, job creation should be the No.1 priority for the government and for this they want that apart from creating new jobs in their own country, the jobs should also not be offshored to other countries.
Here, we would like to tell you about some of the major causes of unemployment in US. We are going to divide them into two categories-
- Domestic Factors
- Economic growth- If the economy grows at a slow pace, then the rates of unemployment will be high.
- Education and training- Workers who are highly educated and trained adequately, face less chances of being unemployed.
- Labor Unions
When workers were associated with labour unions, they had more power, but over the years, unionization in the economy has reduced and the workers are not all that powerful to have a say in matters of income equality and other concerns.
- Global Factors
- Offshoring of employment-The practice of offshoring to other countries has been prevalent in both manufacturing as well as servicing sector. The major reason being low cost of labor.
- Tradable and non-tradable sectors-
Sectors which need the local workforce such as healthcare and construction are the non-tradable sectors and the tradable ones are those in which jobs can be given to people of other countries. For a stable employment rate, the job creation must focus on the expansion of non-tradable jobs.
It is thus important for the government to first think of the local workforce and create ample job opportunities to absorb the labor force into the economy.
Image credit: progressillinois.com/