Chapter 5 Blog- America’s Biggest Problem? Unemployment

Link: http://news.ca.msn.com/top-stories/msnbc-article.aspx?cp-documentid=27639525

Summary:

In this article, it talks about how unemployment is a major problem in the United States right now.  In a Gallup poll, it indicates that 35% of the people considered themselves “unemployed”.  The unemployment rate is the highest in the United States since October 1983 where 41% of the poll indicated they were unemployed..  The issue of unemployment has been a serious cause of dissatisfaction in the United States.  Some people are blaming the U.S. government for this cause because the government is not doing its job to help people who are in need of government support.  According to a survey, in the past year, the economy and the unemployment rate in the United States have been ranked the biggest problem for them.  This clearly shows that the government needs to do something about solving the problem of unemployment, as people are worried about not having a job especially in today’s hardship of paying personal expenses.  Today, United States’ unemployment rate has been improving as of late.  The unemployment rate is now at 9% with approximately 14 million people looking for a job.  Approximately 8 million people, who are working part-time, want a full-time job.  Many economists strongly believe that the unemployment rate posted by the government is underrated as the unemployment rate should be way higher than 9%.  The Gallup poll was a survey that was based on 1000 people.

Connection:

This article is related to chapter 5 because it talks about how unemployment is a major issue in the United States right now.  The term that is used to define the area of economics concerned with the overall view of an economy is macroeconomics.  Recently in a Gallup poll, like the Labour Force Survey measures the number of employed and unemployed people in the U.S. on a monthly basis.  It was represented by 1000 people and 35% of the people considered themselves “unemployed”.  Therefore approximately 350 people considered themselves “unemployed”.  However this stat is very contradictory to the published unemployment rate by the U.S. government, which is 9%. When is a person considered unemployed?  For example, a person who had looked for work in the last 4 weeks is considered unemployed.  In the article, the people who are classified as “discouraged workers” are not considered unemployed because they are not looking for work.  They are also known as the hidden unemployed because those are members of the population who are not actively seeking a job because they do not believe there are suitable jobs available.  The people who are actively looking for work plus the people who are employed makes up the participation rate.  We can calculate participation rate with labour force divided by the entire population who is 15 years +.  With a 9% unemployment rate (14 million people unemployed) we can take 14 million people and divide by 9% to determine the employment rate.  There is an approximate 155 million people who are employed.  There is an approximate 200 million people who are over 15 years of age in the United States.  To calculate the participation rate, we have to add unemployed and employed people (14 million + 155 million) and divide it by the population (15 years +).  The result is an approximate 84.5% participation rate in the U.S. right now.  Therefore 15.5% of the population is not actively looking for work.  Without the restrictions on unemployment rate, the unemployment rate (Let’s say for now including people who are not looking for work) would peak 25%.  The reason why the government put so many restrictions on to consider who is unemployed is because restrictions understate the unemployment rate which makes it more appealing to the rest of the world.  If unemployment was really high, it would discourage immigrants because job opportunities are a significant factor that influences the decision of immigration.  The U.S. government should start paying attention to unemployment right now as it is causing some uneasiness in some people right now.

Reflection:

After reading this article, I do not think the Gallup poll is a good economic indicator because sometimes in a survey, people don’t tell the truth of what their real status is.  Sometimes people might be embarrassed that they are unemployed and say that they are employed.  Also, the unemployment rate published by the U.S. government is not a good economic indicator because the government put many restrictions on to consider whom is unemployed and whom is not considered unemployed.  Although the unemployment rate is measured accurately by the U.S. government however in my opinion, the unemployment rate hides the truth.  The unemployment rate is merely an understated number that makes it more appealing to the public.  If you counted people who is not looking for jobs the unemployment will reach around 20-25%. The government can probably hide the problem of unemployment in stats and numbers but the government cannot hide the actual problem of unemployment and uncertainty amongst the people. With such a high unemployment rate in the United States, why is United States still the government the leading country with the highest GDP in the world?  In my opinion I think there are so many large American corporations and there are many American investors that are able to make up for the high unemployment rate.  The gap between rich people and poor people is very large in the United States.  That explains why there are many rich people in U.S. as well as a lot of people living in poverty.