The number of weekly applications for unemployment benefits remained at a 43-year low since November of 1973. The unemployment rate, as of late, has been hovering around its target percent at 5%. Still, many were skeptical that the decrease in unemployment would be short lived. However, applications for benefits are typically associated with job cuts by companies. The number of applications for unemployment benefits is a useful job indicator and this suggests that we may continue to see similar unemployment rates. Many economists contribute the reduced rate to robust job gains over the past few years. The job market could be seeing the longer term effects of companies hiring more.
http://finance.yahoo.com/news/applications-us-unemployment-aid-remain-123707809.html
It will be interesting to see the impact of unemployment insurance on future unemployment rates. Firms want to cut costs, thereby reducing the chance of giving UE, but workers are reluctant to accept offers without unemployment insurance. This will definitely increase the unemployment rate in the long run. The number of applications for unemployment benefits is high, showing that the labor force participation rate is still high, but these applicants are not able to get a job because firms want to cut costs by employing those not applying for the Unemployment Insurance.
ReplyDeleteConsidering inflation levels are still low, it is affordable for companies to continue hiring labor. Although the article states that number of job openings have decreased, Yellen's approval of the increased inflation rate leave hope for this continued low unemployment.
ReplyDeleteI agree with the above statement, it will be interesting to see how this plays out. Potentially I could see this being effective; however, I can also see many problems with this.
ReplyDeleteIt is important to keep in mind that while yes, layoffs may be scarce with the number of Americans seeking unemployment benefits staying at a 43-year low, however the labor participation rate is not as high as it has been. As the baby boomers retire it will continue to decline. The article also mentions the fact that job gains have weakened. If the amount of unemployment benefits received were to be shortened then that would give people a higher incentive to go out looking for a job sooner.
ReplyDeleteThe effectiveness of the unemployment insurance decrease is dependent on job openings, which have been fewer than in recent years. Now with this upcoming election and both candidates promising a job increase, it will be interesting to see what happens in the future.
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