Unemployment in America and the Federal Governments Effectiveness

Research Paper: Unemployment in America and the Federal Governments Effectiveness

Research Paper: Unemployment in U.S.A. Federal Government Effectiveness

        There has been and will always be unemployment throughout the world.  This is because, regardless of what part of the world one may live in, we all share the four common factors of unemployment.  These factors consist of frictional, seasonal, cyclical and structural unemployment.  This research paper will explore briefly over what the different types of unemployment are, then in depth, analyze the United States federal government has on unemployment and its effectiveness.  This is to give a brief outline and study the role of the federal government while contrasting religion and fluctuating economy on unemployment.

For reasons of clarity, it is necessary first of all to define our terms.  Unemployment is the existence of a segment of the national labor force who are willing and able to work, but cannot find employment.  The Goodman definition of unemployment requires that the individual must be registered as unemployed, in receipt of unemployment benefits, and be actively seeking work.  One case of unemployment, known as frictional unemployment, is voluntary.  Frictionally unemployed workers have chosen to move from one job to another to seek better pay, or to look for better opportunities (Kramer, 2002).  With those individuals that has been displaced from their jobs, fall under the category of involuntarily unemployed.  Seasonal unemployment affects occupations such as fruit pickers, fishermen and shearers, where they are only employed during certain times of the year because of the nature of their work.  Both frictional and seasonal unemployment are usually short-term unemployment therefore, not pressing social issue while cyclical and structural are more concerning.
        Cyclical unemployment occurs in the downswing phases of the trade cycle.  When the level of spending in the economy is insufficient to purchase the goods and services for sale, firms will find it necessary to put off some of their labor.  Cyclical unemployment rises and falls in line with change in economic activity (Kramer, 2002).  In periods of high economic activity there are more job vacancies and the unemployment rate decreases and vice versa.  In these periods of low economic activity it tends to be associated with a rapid rise in unemployment, but recovery from recessions tends to take longer periods of time to feed through into the market for labor. Recessions are reduced levels of demand for goods and services.  Unemployment follows as costs must be reduced.  So from this, businesses tend to react by employing machinery instead of labor (Macionis, 2011, p. 217).  The fact that cyclical unemployment rises quickly, but falls slowly, might have something to do with structural unemployment if employers replace labor with more productive capital equipment to save costs when the economy is tight (Kramer, 2002).
        Structural unemployment is the impact of changes in the framework of the economy on the demand for labor. Structural change is caused by technological change, which usually means that the demands for some types of workers increase, while others find their skills are no longer relevant (Macionis, 2011, p. 217).  Examples of these are computer operators replacing typists, bank tellers replaced by automatic teller machines and driveway attendants replaced by self-serve petrol pumps.  Structural change is also caused by changes in consumer demand.  This results in job losses in some occupations and gains in others.  An example of this is compact discs which replace records.  This lead to workers not needed in the record factories (Macionis, 2011, p. 49).  For a few people, structural unemployment will be temporary.  Workers willing and able to be retrained with new skills will find that new categories of jobs emerge.  Meaning, unemployed typists may find new jobs in desktop publishing.  However, it is very likely that a large number of those who are unable or unwilling to retrain may find that they will be unemployed for a longer period of time.  Inflation may also have been a cause of structural unemployment, if it contributed to business uncertainty and rising costs.  Increased costs which are not matched by higher production make it more difficult for firms to operate profitably.
        With everything being said, these different types of unemployment categories have serious economic and social effects.   Unemployment represents a waste of productive labor resources in the economy.  Unused or idle resources make no contribution to production, leading to a less profitable income in United States.   The economy will produce less goods and services that it potentially could if resources were fully employed.  Here unemployment is represented by point B, which lies inside the production possibility frontier.  Any point on the frontier, such as point A, represents full employment of resources.  The distance between A and B is known as the Gross Domestic Product (GDP) gap.  The gap represents an economy inside its production possibility curve, foregoing output, income and welfare as a result (Zucker, 1997).