Unemployment Issues in the United States
Carson Hall Sales
Dr. Ajith Silva
BEHS210 Section 6380 Semester 1309
Table of Contents
Introduction and Statement of Purpose
Ronald Reagan once said that “Unemployment Insurance is a pre-paid vacation for freeloaders.” However, unemployment is not defined by voluntarily deciding to leave a job. Involuntary termination comes in two forms, dismissal and layoff. If the employee is dismissed, or “fired”, then it was their fault for not complying with the conditions of their employment. A layoff results from a reason not related to performance. For example, the company could be going out of business, discontinuing a good or service, illuminating specific positions or the position could have been a temporary one.
On a larger scale, the current recession in the United States has dramatically effected its labor force. Initially, “the female labor force… [increased] by about a million women” but since then “[the] growth stopped and a slight reversal occurred” (Higgs, 2014). The male labor force has had its own inconsistencies. Although in the last year the percentage of Americans out of work has fallen, the rate of unemployment is reason to be concerned. The total civilian employment is still two million jobs below its level at the end of 2007 as shown in the graphs from the article (Higgs, 2014).
The question is will economic and policy change put millions of people back to work. Some studies show a decline in people seeking employment if given other options like retirement or government programs. Other people may suffer from health problems associated with the loss of their job. One fact is certain that if the United States does not see the return of employment rates that it can lead to a slowly dissolving economy. Therefore, “medical interventions, social welfare initiatives, and public health policies” are required to “protect mental health during… adulthood [which] could ultimately improve population health in the future” (Mossakowski, 2009). The Political Perspective on the Issue
As mentioned in the introduction, the question of how the government views unemployment has long been debated. Welfare. In a reference to Esping-Andersen who studied the welfare state, the article describes how the “generosity” of the government causes higher unemployment (Denier & Smith, 2012). Welfare assists citizens whose income falls below the poverty line. They can receive food stamps, cash assistance, free or reduction in rent housing, health insurance, daycare and other benefits depending on their circumstances. The fear is that people will realize their ability to function solely on the assistance. Thus, “employees deploy less effort at work… employees will quit demanding jobs [and] it prolongs spells of unemployment by reducing the incentive to find work” (Denier & Smith, 2012). Neoliberalism. A political philosophy that supports privatization, deregulation, free trade and open markets is Neoliberalism. The Reagan and both Bush administrations focused on policies formed from this philosophy which led to economic depression. During the Clinton administration, the fundamental idea was “to ‘develop the economy before the military’… [which] inaugurated the era of the ‘new economy’” (Jinhua, 2013). During this period, the unemployment rate was at its lowest.
Neoliberal policies expand the gap between the rich and poor. Due to the removal of restrictions on finance, trade and investment, capital could expand to better quality innovations. For example, the improvement in technology and the use of more efficient manufacturing reduced employment opportunities. Companies constantly search to limit their labor and product costs which can be done by decreasing “blue-collar employment” (Jinhua, 2013). The Economic Perspective on the Issue
Homelessness, based on the responses in a study, is caused from “unemployment, cost of housing, substance abuse, medical or mental health disability” (Burke, Johnson, Bourgault, Borgia, & O'Toole, 2013). The research shows there is a direct relation between job-loss and how the cost of living effects a person’s mental capacity. For young adults, the longer the duration of unemployment, the greater the risk of depression (Mossakowski, 2009). Depression is the reasoning behind the separation of those seeking and not seeking work because it can affect how the individual views their situation. Health Care. High unemployment rates have been linked to increased occurrences of illness. Smoking, excessive drinking and little to no physical activity are habits that persons may adapt after job loss. These behaviors lead to “hypertension, hypercholesterolemia, and other risk factors for cardiovascular disease” (Kozman, Graziul, Gibbons, & Alexander, 2012). Other reports have even made a correlation between unemployment and low income with high mortality rates, mental disorders, and suicidal tendencies. Even in instances where a person is still employed they may face depression and anxiety due to job insecurity (Notara, Koulouridis, Violatzis, & Vagka, 2013). At times, programs are developed that offer training for new positions. This support and possibility of job security prevents some health effects. The irony in this situation is that individuals neglect health insurance due to reduced household income and the growing recession. Without the ability to find new employment, Americans suffer long gaps in coverage. In a two year span, “the number of uninsured nonelderly Americans increased by 5.6 million” (Kozman, Graziul, Gibbons, & Alexander, 2012).
With a decrease in health spending, health care professionals see a negative impact as well. Recently a friend of mine was laid off because she was considered “nonessential personnel”. Funding is for public services where professionals can provide care with few resources. The reduction in operating and labor costs immediately causes high patient-to-nurse ratio. Hospital personnel are more likely to express their dissatisfaction with their jobs leading to unsafe and low quality care of the patient. An Integrated Perspective on the Issue
Income determination theory states that the government creates employment by hiring people, supplies income through programs like Social Security or spends to provide services for people such as Medicare and Medicaid. When the government funds the income of people, it has no direct effect on employment. Unemployment Insurance. A primary resource to an individual that is unemployed is Unemployment Insurance (UI) but it provides benefits only to persons who were laid off. During the Great Recession, states had to borrow funds from the federal government in order to supply UI benefit payments. In this period, “the mean duration of unemployment peaked at 40.7 weeks” (Vroman & Woodbury, 2014).
UI was established under the Social Security Act but the Federal Unemployment Tax Act (FUTA) pushed states to adapt UI benefit programs. It applied a payroll tax then credited a majority if the state had a program. In UI financing, “the federal-state ‘partnership’ has led to uncertainty and confusion about where responsibility for an adequate UI system lies” (Vroman & Woodbury, 2014). The lack of support is leading states to abandon the system although it is beneficial to a state’s economy. If individuals have an increase income, it will promote spending. The issue, regardless of how durable the system is, lies in what happens if the citizens receiving funds ever become employed again. Global Competition. Gross domestic product (GDP) is “the total market value of final goods and services produced within an economy in a given year” (O'Sullivan, Sheffrin, & Perez, 2012). Asian GDP exceeds that of the United States due to industrial competition where China has sustained economic growth (Jinhua, 2013). The Chinese market is greater in size and they focus on labor as well as education. In the United States, there are better working restrictions which is beneficial to the employee but not to the costs of labor. Because of basic human rights, the U.S. uses imports as opposed to having product “made in America.”
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