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Unemployment Deficit
Recently Nancy Pelosi, Speaker of the United States House of Representatives was quoted as saying that unemployment benefits are the leading stimulus to an economy in need of a quick fix. Her reasoning was that the unemployed immediately spent those benefits, therefore generating economic activity. Financial experts were quick to point out that such reasoning would mean that every citizen should just go on unemployment then, because such action would generate so much economic activity that the recent recession would be a distant memory in a very short period of time.
The question that this paper will seek to answer is whether extending unemployment benefits is a boon to the economy as stated by Nancy Pelosi, or does the extension of those benefits only add to the deficit, thereby ensuring that unemployment continues to be a huge problem and a drag on the economy.
The answer to that question is important because of the current situation facing the United States. The official government unemployment figures hover at just under 10% and there are many additional millions of other unemployed individuals who are not included in that number, many of whom have just given up all hope of finding a job. Jobless benefits have been extended to three years with bleeding heart liberals decrying the notion that we as a country would leave our unemployed fellow citizens with no benefits at Christmas time, while cold-hearted conservatives are decrying the notion that...
The conservatives say it takes away all incentive to even look for work, and does nothing to alleviate the long-term unemployment scenario.
So, who is right and who is wrong? Many experts believe that today's job market is eerily similar to the late 1980's and early 1990's.
One expert wrote about the jobless rate at that time in the following manner; "In contrast to more educated professionals who could, at least until recently, anticipate a return to their previous living standard once they obtained a new position, blue-collar workers experiencing structural unemployment often face a future of reduced economic circumstances and the need to find new occupational opportunities (Hansen, 1988).
That same scenario is occurring today, but at an even faster rate. Many manufacturing, warehousing and manual labor intensive jobs have left America's shores to find greener pastures elsewhere around the world. The viability of electronic transitions have enhanced those efforts. Many of the former employees in these areas are now looking at chronic long-term unemployment. Paying these individuals not to work only adds to the disincentive to find a job, at least that is how some view it. Others, like our esteemed President, Mr. Barack Hussein Obama, say that not extending benefits to these individuals would lead to financial despair and chaos amongst the unemployed. In a July, 2010 speech he…
References
Downing, N. (2009) Riding out the storm, State Legislatures, Vol. 35, Issue 8, pp. 22 -- 24
Hansen, G. (1988). Layoffs, plant closings, and worker displacement in America. Journal of Social Issues, 44(4), 153-171
Obama, B.H. (2010) Remarks on legislation extending unemployment insurance benefits, Daily Compilation of Presidential Documents, 7/19/2010, pp. 1-2
Unemployment Rate The Disparity in the Unemployment Rate in the United States A recent article in the Sun Journal by Margaret Fisher (2012) has raised some serious questions as to the true state of the economy. While statistics from the department of labor assert the unemployment rate has dropped, giving the impression that the economy is in a recovery mode, Fisher maintains that this is misleading due to the fact that many
Unemployment rate in the United States has fluctuated between nine and ten percent for well over two years now ("Labor Force Statistics"). That rate is more than double what it was a mere ten years ago, putting millions more Americans on the unemployment compensation rolls. More alarming than the numbers is the general feeling of pessimism that has enveloped the country as the population wonders when the economy might turn
For example, one Pontiac Assembly plant in Pontiac, Michigan, "was running three consecutive eight-hour shifts, employing 3,000 people and making 1,300 trucks a day," in 2003, but in the summer of 2009, the plant had only 600 workers and "was running just one shift" (Mahler 2009, p.1). As a result of the failure of GM, the housing bubble, and the explosion of easy credit and 'creative' financing, many Michigan
Thus, the testing will not only expose a relationship, but may shed light into how it will continue to evolve in the future. Using Microsoft Excel, a regression test was administered for each individual independent variable as it related to the dependent variable of general unemployment in Detroit. Data Automotive Industry Employment rates in thousands Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual 2002 2003 2004 2005 2006 2007 2008 96.9 2009 79.5 86.6 86.2 85.4 77.2 73.4 73.5 80.5 84.3 83.9 82.8 83.9 81.4 2010 82.7 82.7 82.6 83.3 83.8 85.0 81.2 83.3 87.6 89.4 89.8 90.2 85.1 2011 89.4 90.4 91.2 93.1 93.4 94.1 83.3 92.0 94.7 96.3 96.7 97.4 92.7 2012 97.6 98.2 99.3 97.4 98.5 99.5 95.8 96.8 97.7 97.7(P) P: Preliminary (United States Bureau of Labor Statistics 2012) Year Period labor force employment unemployment OUTPUT Regression Statistics Multiple R 0.872748 R Square 0.761689 Adjusted R. Square 0.7319 Standard Error 1.573775 Observations 10 ANOVA df SS MS F Significance
"The Detroit, Michigan drop-out rate among black males is 50%, the Detroit unemployment rate among black males is 50%" (Kill 145). This demonstrates that education is very important when considering unemployment rates and that the auto industry is, to a certain degree, not the only institution responsible for the critical conditions currently faced by individuals in Michigan. Although it is difficult to determine what other factors are responsible for the
For the purpose of this discussion we will explain the economic impact of unemployment rates. One of the main impacts of unemployment on the economy is that it inhibits people's ability to pay for necessities and luxury items and in doing so consumer confidence is diminished ("Unemployment"). In addition when people are unable to purchase their basic necessities they begin to utilize welfare programs which can be associated with