It seems that everyone has noticed that unemployment has been on the rise. As the month of August came to an end, instead of going down with the increase in jobs unemployment rose by .1 percent. The writer describes this phenomenon to be caused by "the continued draw-down in temporary census employment." This set back erased more than 100 thousand jobs from the labor market report of august. Also the write reports that despite the increase in unemployment in august, private employment saw a relatively large growth. Private employment as been seeing growth since December of 2009. The writer states that our economy is producing enough jobs to rapidly bring down the unemployment rate, but instead it went up. He believes that "at this point of the business cycle, labor force growth in a positive sign. I agree, a growth in the business cycle is good for our economy and will help slow down the upward movement of the unemployment rate. There is growth in the labor market, but is it fast enough to combat the steadily increasing unemployment rate?
I think one thing that this depends on is what types of jobs are being produced. Some people that became unemployed had jobs in fields they had actually studied to be in and might not want to downgrade, or just keep hoping something in their field will open back up. Also, most jobs want you to have experience in that field before starting, so if you apply and don't have experience the chance is that you'll be turned down.
ReplyDeleteThe employment data seem to point that the economy is on the path of progress because of the increase in jobs in the private sector. Such a positive change might actually be the cause of the increase in unemployment rate, with discouraged workers joining the labor force.
ReplyDeleteAn article published in 'LA Times' today emphasized Obama's intention of extending tax credits for the private sector, which implies more opportunities for investments and more job creation. But of course this cannot happen overnight and it will take time for the economy to emerge from the trough and enter the expansion phase of the business cycle.
I think that private employment will rise even more as the surplus of individuals competing for summer jobs decreases with the beginning of the school year and as the demand for labor increases among private employers as we approach the holiday season.
ReplyDeleteIt is likely that the decrease in the unemployment rate is due to an increase in the number of discouraged workers. The concept of not counting 'discouraged workers' however, does not seem a reliable method of determining the rate of unemployment (which, if at this point decreases, indicates a recovering economy). As Joanna pointed out, the workers who are not taking up the temporary/part-time jobs might not want to downgrade, and are still hoping to find a job to somewhat match their qualifications. Thus, they are still searching for a job, but because the firms requiring their level of skills have no openings and are not accepting job applications, they cannot apply there and therefore, are no longer counted as unemployed. If I have understood correctly, those included in the 'unemployed' definition are those who continue to apply for jobs on a weekly basis. But if there are no openings to apply for and no interviews to give, the people hoping to find a job are taken off the unemployment list. Hence, the unemployment rate declines and everyone is happy the economy is improving! Really, the ‘discouraged worker’ is still unemployed and will take up the opportunity of a worthwhile paying job the minute it opens up.
ReplyDeleteOne should also consider the hypothetical situation if the ‘discouraged workers’ who find themselves overqualified for minimum-wage, enter-level jobs did actually end up competing for those jobs, the level of unemployment would again decrease further as the unskilled ‘unemployed’ labor force is kicked off the count(because their chances of getting the job plummet) and made into a ‘discouraged worker’. There would be an increase in the number of people not being able to put one meal on the table they wished they had the money to buy. The evil chain of events would eventually lead to a higher crime rate and the ‘discouraged workers’ would have no choice but to turn to society’s delinquent groups to make ends meet. Although the unemployment could be because of an increase in workers accepting part-time jobs, the question to think about is, whether this decrease in the ‘unemployment rate’ is really a moment to pop open a bottle of champagne or to figure out a way to have people focus more on stimulating the economy through investment and entrepreneurship that will open up jobs rather than ogle at a delusional ‘unemployment rate’ number.
The problem with the unemployment rate growing alongside the demand for labor could be that the United States is swiftly becoming a service-based economy, in that most of the jobs that are being created and demanded for are much different positions that people who have been laid off in the past several years had. Small businesses suffered more than anyone out of this recession, with many having to shut down and others dropping much of their workers. A lot of the jobs lost from these small businesses were from physically demanding positions. Mechanics, carpenters, farmers, etc. were all effected, and these people don't want to work in an office or do anything that they've probably done for most of their lives. Its kind of an intrapersonal way of looking at the situation, but this certainly accounts for part of the problem.
ReplyDeleteThe unemployment rate is actually declining as the demand for the labor is growing. And the increase in the demand for labor could possibly be because firms are less cautious about hiring now and the panic of the recession has passed (thus the massive laying-off stage is nearing its end). This also means that workers are no longer as productive as they were when they initially were desperate to keep their jobs (even if wages were lowered - some wage is better than none!) and the firms are no longer able to squeeze work out of them as they could before. Hence, the realization of the need to hire more workers (for greater productivity) will help revive the economy. However, the decline in unemployment rate is, unfortunately, not entirely because of a positive increase in employment, but rather a greater number not being counted as part of the labor force anymore.
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