Question

Sometimes when the U. S. economy starts pulling out of a recession, the unemployment rate actually rises for a time rather than immediately falling. This is commonly referred to as a "jobless recovery". There are 2 reasons for this strange phenomenon occurring. What are the 2 reasons? Explain. (Hint: Refer to the Extra PPT on Unemployment and Chapter 6 of the course text! You could also do an Internet search for "What is a jobless recovery?"!)

Additional questions to answer within this question:

Do ALL unemployed workers IMMEDIATELY find jobs when recovery begins? Why or why not?

Do some firms automatically hire new recently unemployed workers or do some have existing
workers who were not unemployed work more hours to increase production?

Do ALL“discouraged workers” who had left the labor force (and hence are NOT counted as
unemployed since they’re NOT actively looking for work) get jobs IMMEDIATELY
after coming back into the labor force when recovery begins?

Answer 1

(1)There are two main reasons for jobless recovery are organisations restructuring and job growth polarization.

Organisations restucturing- During the recession, firms specially small firms tend to resturcture their businesses to minimize the cost of operations by removing some of the unimportant jobs from the firms. Even in the worst scenario, the firms owner close at the time contraction lay off of some workers parmanently and to some temperarily. Then they dont hire those who are laid off parmanently to cut cost.

Job Growth Polarization-   It has been come in the notice that growth of high skilled jobs compare to jobs which need low skills. the growth in the high skilled jobs is polarized. Some simple adminstrative jobs are replaced by computers to cut the cost. The employers dont rehire the low skill labour or decrease the number of labour than required.

(2)If this is a jobless recovery then one must have to do a lot research to get a job or has to change his mind to try out in the different if jobs are availabe in his field. There is no gaurantee that one may get job in the same field because in the race of reducing the cost to earn more profit, the industrials try to get different ways to get the work done either it is robotic or hiring new cheap labour.

(3)After recession period is over, companies prefer not to hire new workers because this decision will increase their cost of operations. They have some workers left so that atleast they can run their businesses.

(4)It is very defficult for a person to get to the worker when he gave up. He has to acquire a new skill or be satisfied at low level of wage. The firms keep changing their dynamics of operations and always look for reducing their cost to increase profit.The eduction level of applicant plays a crucial role in this, if he is enough qualified to try his hands in new field.