Causes And Effects Of Unemployment On Economy - Assignment Example

Causes And Effects Of Unemployment On Economy To put it simply, unemployment pertains to the existence of people in the national workforce, who are willing to do work, but there are no jobs where they could be employed. It would not be wrong to say that in the context of the ongoing economic recession, unemployment is a very serious problem faced by both the people and the government. The political leaders and the associated experts are doing their best to understand the causes that have created such a high unemployment and to initiate measures to be able to soften the impact of a high unemployment. Unemployment is an issue that has not only severely discouraged and depressed individuals and groups, but it is a serious problem that does indeed has a debilitating impact on families and neighborhoods. However, like and other problem, one does need to grasp the reasons that cause unemployment and the overall impact of unemployment on individual people and families, to be able to solve this dire economic and social problem. A long term decline in the demand for labor owing to automation of industries and globalization and the soaring recession are two major causes behind the current unemployment that have caused immense suffering and pain to the individual workers and families. Industrial Revolution did much good to the national economy and it did create many jobs by boosting industrialization and productivity. However, the ironic aspect of industrialization is that it did eventually lead to the automation of production processes that eventually resulted in a dwindling demand for human workers. Rapid industrialization in the current times has resulted in the emergence of state of the art technologies like robots and computers that have replaced the jobs done by workers at factories and production facilities (Hall, 1995, p. 60). The good thing is that a significant section of the workforce did understand the need to acquire new technical skills so as to be able to survive in an industrial economy that is getting highly automated. Yet, the sad thing is that there is a significant chunk of the national workforce that is not technology savvy, and thereby lacks the capacity and the potential to be employed in industrial facilities that are automated and digital (Hall, 1995, p. 60). This has given way to high unemployment. The impact of technology associated unemployment has been manifold enhanced by globalization, which has deprived the Western economies of the cost advantage that they enjoyed in the area of industrial manufacturing and production. The fact is that the national economy has simply lost the cost advantage that it enjoyed in the domain of industrial manufacturing in almost most of the major industries, are they automobiles, electronics, apparel and garments, household goods, and industrial raw materials (Macarov, 2003, p. 12). This has made the industrial class relocate some of its production and manufacturing activities and operations to Eastern Europe and Asia, where wages are low and thereby the entrepreneurs are able to manufacture goods at a low cost (Macarov, 2003). The other thing is that in the present times the national economy is grappling with a rigid and discouraging economic recession. Thereby a significant section of the population simply lacks the resources and cash to be able to spend it on buying and purchasing goods and services. This has resulted in a dwindling of the net demand for goods and services in the larger economy. This has caused a steep slowdown in the overall economic growth and thereby the national economy is unable to absorb the people who lack employment and are willing to get employed (Applebaum, 2012, p. 24). Moreover, the industrial establishments are not only laying off workers owing to a fall in demand, but the failure of a significant number of businesses owing to the economic slowdown has given way to chronic redundancies and a lack of demand for labor (Applebaum, 2012). Firms are reducing employment to cut off costs. This has given way to dire circumstances for the unemployed people and their families. There is no denying the fact that unemployment is taking a heavy toll on the emotional well being and happiness of the people who are unemployed (Shiller, 2010). The individuals who are unemployed owing to the advent of new technologies and recession are facing multiple problems of both the financial and non-financial nature. Going by the fact that unemployment has a huge impact on all the major aspects of the life of the unemployed people, are they housing, health, education, nutrition and sense of well being, these people today are under a tremendous amount of stress and tension (Shiller, 2010). These high levels of unemployment associated stress are not only leading to much apathy and low morale amongst the individual workers, but it is also hitting hard on their physical and mental health. The unemployment has also left the families of workers who have been laid off or are without a job, vulnerable to the financial, emotional and psychological impact of unemployment (Shiller, 2010). The families where the major bread winners are unemployed are to bear with much economic hardship and mental pain. Unemployment has led to a major deterioration in the standards of living of the families and neighborhoods (Shiller, 2010). People not only find it difficult to bear with the nutrition, education and health expenses of their families, but they also find it really hard to afford the very basic necessities like food and housing. Going by the high unemployment rates, many families have already exhausted their savings and in families where both the spouses are unemployed and that lack a medical insurance, the chances for hope are really bleak and pitiable. In many cases, the dearth and starvation caused by unemployment has massively deteriorated the physical and mental health of the people. There are a large number of families who have to deal with uncertainty and depression on a daily basis. The policy makers today need to understand that unemployment has fomented to be a major national problem that does have the potential to cripple the psychological confidence of the individual workers and the social fabric of the neighborhoods and families. Today unemployment is a major threat to the American way of life and the hope and positivity that defines the nation’s social fabric. Steps need to be taken to endow the unemployed workers with the technical skills, so as to allow them to get employed in techno-savvy production facilities. At the same time, encouragement and help needs to be extended to the industrial sector to prevent it from reducing employment and relocating manufacturing operations. If something is not urgently done, this may eventually destabilize the overall society. References Applebaum, L.D. (2012). Reconnecting to Work. Kalamazoo, MI: WE Upjohn Institute for Employment Research. Hall, G.M. (1995). The Age of Automation. Westport, CT: Praeger. Macarov, D. (2003). What the Market does to People. New York: Clarity Press. Shiller, R.J. (2010). The Subprime Solution. Princeton, NJ: Princeton University Press. Read More