Unemployment And Its Effect Essay Example for Free

Unemployment And Its Effect Essay Unemployment has always been considered the single most serious individual, social and economic problem since the emergence of industrialization and specialization of work. The ability to work and earn is considered as one of the fundamental cornerstone of any functional society. However, when people who can work are deprived of it and are forced to waste their otherwise productive time that could have invested in their own material l prosperity while adding value to the nation. It has also various personal, moral and ethical dimensions associated with it that plays pivotal role in determining the well-being and prosperity of individuals, family, society and ultimately the entire nation. The combined effect of all of these factors is that unemployment has become the most studied phenomena in modern social and economic studies. The unemployment situation At present the unemployment rate in U. S is close to 4. 4 percent of the working population, which implies that a staggering 6. 7 million people stand unemployed (Employment situation summary, 2007). The social and economic effect of such large number of people being jobless is worrisome for the overall health of the economy. It implies that millions of working hour wasted every day, aggregate loss of hundreds of millions of dollars per day, greater stress on families and individuals, rise in poverty, unequal distribution of wealth, decline in health standards of the unemployed people and their dependents, rise in criminal activities and drug dependency, suicide related instances and increased stress on government social security programs which further translates in constraints on economy and society. Persistent situation of unemployment causes people to loose their self-esteem, position and status in society, pushing them to social margins where they become depressed, alienated and feel redundant. Unemployment also decreases the working potential of unemployed people, so that when they try to return to mainstream their capacity to work and perform is substantially reduced and their skill set lost or obsolete. Types of Unemployment There are following major types of unemployment seen in the labor market (Krugman, 1994). 1. Frictional unemployment- The period of unemployment when people are switching from one job to another. 2. Cyclical unemployment – When the demand of labor in market periodically shrinks and grows due to recession in business 3. Structural unemployment- This type of unemployment is caused when the profile of job seeker and job are mismatched causing stress for the employee and the employer 4. Technological unemployment Perhaps the oldest kind of unemployment which happens due to people being replaced by new machines and technologies 5. Classical unemployment When market undervalues the labor. 6. Seasonal unemployment – Unemployment in those job sectors that are seasonal such as tourism, construction, and sports and game professions. Issue of high and low unemployment Although persistent and high level of unemployment is debilitating, a certain level of low unemployment is considered good for economic growth as it creates incentives for economic growth and contribute to long-term stability and security in job market (Bernstein, Mishel, Schmitt, 2001). Low unemployment rate is an strong indicator of prospering economic conditions and give greater bargaining power in the hands of workers, where they are able to negotiate with employers on better pay-scales and facilities. On the other hand, high rates of unemployment are typically result of economic recession. The business is not in state to supply adequate number of jobs, and workers are put at serious disadvantage in terms of selection of jobs, wages, and security, creating a situation of continuous strain. Bernstien. J, Mishel L. Schmitt, J. . 2001. The State of Working America, 2000-2001: ILR Press: Ithaca, NY. Employment situation summary. 2007. Bureau of Labor Statistics. United States Department of Labor. Retrieved from web on 17. 04. 2007. http://www. bls. gov/news. release/empsit. nr0. htm Krugman, P. 1994. Past and Prospective Causes of High Unemployment. Retrieved from web on 17. 04. 2007. http://www. kc. frb. org/PUBLICAT/ECONREV/PDF/4q94krug. pdf