Question

Using the Internet or the Strayer Library, research at least three (3) latest trends in unemployment within the U.S. Next, analyze the latest trends in unemployment within the U.S. that you have researched. Based on your analysis, suggest at least two (2) changes that the federal government could make to increase employment. Provide support for your suggestions.

Answer 1

The following are the 3 latest trends about unemployment in the US-

1. While unemployment rates, at 4.1%, are one of the lowest level since 2000, the numbers are being propped up by selected industries.- Most of the job openings are in 3 or 4 key market segments. These include hospitality (4.7% of all job openings), business services (4.7% of all job openings) and finance (4.2% of all job openings). Most of the jobs were added by Healthcare (+21000) and manufacturing (+18000). This means these industries are picking the slack of other industries and hiding the true picture. While the overall numbers are good, it shows that there is a possibility of improving these further.

2. Lack of skilled labor- Skilled labor (people with bachelors degree or higher) have an unemployment rate of 2.1%. This shows that they are in high demand and the shortage is increasing. Earlier (~2015)the shortage was felt only in key geographies, now it has reached nationwide. This has inhibited the prospects of companies growing. This is even more apparent in Financial sector, where companies are growing far more slowly than compared to recovery period of 2008-11.On the flipside, this should result in a wage growth boost, since skilled labor is more in demand. There are some signs of wage growth, but that remains to be seen whether it is because of skilled labor shortage. With baby boomers retiring at an increased rate, this shortage might become a serious issue going forward.

3. Automation is beckoning- With the continuous growth of online shopping and increased complications of the task AI can do, automation is slowly taking over. Combined with skilled labor shortage (which forces companies to automate as many tasks as possible), this trend will only increase. It is also possible that the sluggish rate of wage growth is contributed to by automation too. While it has not reached alarming levels yet, the trend is clear and the government, as well as corporations, should start thinking about policies which might balance the necessity and benefits of automation with the economic needs of the general populace.

2 Changes that the government can do to increase employment-

A. Focus on non-performing sectors such as retail. As discussed above, most of the jobs were added by healthcare, hospitality etc. The government should focus on other industries. These include retail, utilities, information, government, mining and lodging etc. Most of these industries are workforce intensive and government has direct impact on some of them. For example, retail can be benefited if the government is able to create a more uniformed market across the US, for example similar tax strcuture. Mining and lodging can be boosted (something that Trump govermnet got votes on) by improving transportation facilities, some subsidies maybe and more permits. Given that manufacturing is showing signs of upswing, mining can be pushed for good results.

B. Give unemployment benefits- While tax cuts do impact the economic activity positively, its the disbursal of unemployment benefits that impacts the most. For comparison, the Bush cuts were predicted to create 4.2 jobs per 1 million USD cut. Unemployment benefits, for the same amount, create 19 jobs. This is because most of the unemployment benefits are spent on basis necessities such as food, and are not saved at all in most cases. Tax cuts often end up being saved and hence do not stimulate the economy that much. Not to mention that this might result in unemployment going lower than 4%, considered healthy. Then the government would need to lookout that its only frictional unemployment otherwise the economy might heat up.