Question

Is a decrease in the unemployment rate necessarily a good thing for the nation? Explain. Need to be six hundred words long or more with citation and references. Can't be more than 20% of sources use. Thanks

Answer 1

Economic output of a nation is calculated using three main measures, one of which is the rate of unemployment. If adults willing and able to work are unable to find a job, it could be a sign that an economy generates less than it should. On the other hand, unemployment is also a natural phenomenon that even healthy economies experience. Although the official unemployment rate is helpful in reflecting the workforce condition of a country, it does have some limitations that need to be addressed, such as removing unemployed employees.

The unemployment rate as officially calculated is also criticized for understating the degree of unemployment, because it excludes someone who is employed at all or individuals who are not looking for jobs. The official unemployment rate, in particular, leaves off unemployed workers and the underemployed. People who have stopped their search for work because they are told they can not find jobs are called discouraged employees. Some people are counted as working if they work part-time, even though they really want full-time jobs.

A decrease in the unemployment rate is not usually a measure of an economy improving. When people stop searching for jobs and drop out of the workforce as unemployed employees, the unemployment rate will drop even if the actual job situation hasn't changed. Which is why it is important to look at both changes in the rate of unemployment and changes in the rate of labor force participation. Looking at all developments let's give you a more detailed understanding of changes in the job situation.

The argument is that the adult population (or working age population) is not strictly divided into the unemployed and the employed. There is a third group: people who do not have a job (they are not economically active), and retirement, caring for children, taking a voluntary break before a new career, are not interested in getting a job right then either. It also involves those who want a job but have stopped searching, mostly because they are discouraged from seeking the right job. Economists refer to this third group of those who do not work and do not pursue jobs as being out of the workforce or not in the labor force.

Measuring the number of unemployed always presents complications. For example, what about people who have no jobs and who should be available for work but have been discouraged by the lack of jobs in their area and stopped looking? These people, and their families, can suffer unemployment pains. But the survey finds them out of the workforce, because they are not actively looking for jobs.Wage inflation comes in as demand for labor rises as the unemployment rate decreases. Despite fewer workers available for jobs, managers are forced to increase wages to attract and retain talent. A knock-on effect from rising wages is that some small firms have to dip into the less talented work pool, reducing productivity.

Unemployment imposes high costs on us. Unemployed people suffer from income loss and from stress. An economy with high unemployment is facing a cost of opportunity from wasted capital. The population of working age can be divided into those in the labor force and those out of the labor force. In turn, those in the labor force are divided into employed and unemployed. A person without a job must be eager and able to work and actively pursue employment that can be counted as unemployed; otherwise, a person without a job is counted as being out of the labor force. The unemployment rate is characterized as the number of people unemployed divided by the number of people in the work force

Source- New York Times, Economic Times