Unemployment Rates in the United States and Japan from 2010 to 2014 - Research Paper Example

Unemployment Rates in the United s and Japan from to Introduction The United s is a federal republicwhich consists of 50 states as well as a federal district, and its capital is Washington D.C. The United States has President Barrack Obama as its head of state. It occupies an area of 9.85km making it the fourth largest country based total area. The United States has a population of 316.1 million according to the 2013 World Bank statistics. In 2013, the nation had a gross domestic product of US$16.8 trillion. The U.S is considered as one of the most multicultural and ethnically diverse nation in the entire world. This diversity has been brought up by large-scale immigration. However, by 2010, they were over 600,000 homeless persons and an additional 9.1 million were unemployed. The increasing unemployment rates have been a challenge to the local, state, and federal government. The rate of unemployment in the United States was 5.8 percent or 9.1 million individuals, as of November 2014. On the other hand, Japan is an island country in the East Asia with Tokyo as its capital. Japan’s Prime Minister is Shinzo Abe. Japan has a population of 127.3 million according to the 2013 World Bank Statistics. This makes it to be the tenth-largest populated country in whole world. Based on the nominal gross domestic product, Japan is the third-largest economy globally. It is also the fourth-largest economy according to the purchasing power parity. Japan has also the second overall life expectancy at birth as compared to any other nation across the world. The life expectancy is above 83 years for people born between 2010 and 2015 (Henshall 15). Japan has the lowest unemployment rates standing at 3.5 percent as of November 2014. There is a significant difference between the United States’ and Japans unemployment rates. Unemployment is defined by McEachern (23) as people who do not have a job and available for work. Workers who are laid off are also considered as unemployed. To that end, the paper will analyze the change in the unemployment rate in the United States as compared to Japan from 2010 to 2014. Discussion In America, the U.S Bureau of Labor Statistics (BLS) defines an unemployed person as someone who does not have a job, and has actively searched for work in the recent times, as well as currently being available for work. Proceeding further, Remer (22) asserts that people who are not in the labor force are not considered as employed or unemployed. In this regard, the labor force comprises of both the employed along with the unemployed. Anderton (11) affirms that people who are not in the labor force are either in school or retired. Unemployment trends in the United States In the U.S, Walton and Hugh (34) notes that the rate of unemployment rates rose through the years to peak in 2010 at 10.9 percent before commencing to fall to 5.8 percent as of November 2014. Between 2010 and 2014, the rate of unemployment has been on a downward trend. Figure 1: United States employment statistics As of November 2014, the unemployment rate was 5.8 percent and the number of the unemployed people was 9.1 million. Amongst the major workgroups, the rate of unemployment for the adult men increased to 5.4 percent, adult women 5.3 percent, teenagers 17.7 percent, blacks 11 percent, whites 4.9 percent, and the Hispanics 6.5 percent, as well as 4.8 percent among the Asians. Following this further, the number of the long-term unemployed was 28 million. These people accounted for 30.7 percent of the unemployed population. However, from 2010 to 2014, the number of the unemployed has reduced by 1.2 million (United States Department of Labor, BLS). The number of individuals employed part-time for economic reasons was 6.9 million and these people would have preferred full-time employment. The number of the unemployed has reduced by 329,000 in the period between 2010 and November 2014 (Trading Economics). According to the BLS, the civilian labor force participation rate was 62.8 percent while the unemployment-population ratio was 59.2 percent as of November 2014. An estimated 2.1 million individuals were marginally attached to the labor force. Beaudreau (45) describes the marginally attached persons as people who are currently in the labor force they wanted and they are available for work. Proceeding further, about 698,000 persons were discouraged workers. As cited by Brynjolfsson and McAfee (32), the discouraged workers are people who are currently not looking for work since they are of the belief that there are jobs available for them. Figure 2: Unemployment rate from January to November 2014. As of November 2014, according to the Bureau of Labor Statistics estimates, the United States gained over 200,000 jobs with the professional and business services providing 86,000 jobs, retail trade 50,000 jobs, health care 29,000 jobs, manufacturing 28,000 jobs, financial activities 20,000 jobs, transportation and housing 17,000 jobs, food services and drinking places 27,000 jobs, and construction more than 20,000 jobs. Based on this statistics, the unemployment rate has been on the decrease since 2010 as shown in the table below (United States Department of Labor, BLS). Table 1: Unemployment rates between 2010 and 2014 in U.S Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec 2010 9.7 9.8 9.9 9.9 9.6 9.4 9.5 9.5 9.5 9.5 9.8 9.4 2011 9.1 9.0 9.0 9.1 9.0 9.1 9.0 9.0 9.0 8.8 8.6 8.5 2012 8.2 8.3 8.2 8.2 8.2 8.2 8.2 8.1 7.8 7.8 7.8 7.9 2013 7.9 7.7 7.5 7.5 7.5 7.5 7.3 7.2 7.2 7.2 7.0 6.7 2014 6.6 6.7 6.7 6.3 6.3 6.1 6.2 6.1 5.9 5.8 5.8 By March 2013, workers below the age of 25 had an unemployment rate of 16.3 percent. This was twice the national average. Even though the employment conditions from 2009 to 2013 were difficult for the young people, the situation has improved in 2014. Over 8 million jobs were lost as a result of the global economic crisis. These effects were felt even in the early 2010. However, the American employment started to increase and almost regained the pre-crisis peak by the end of November 2014. As shown in figure 3 below, the civilian unemployment rates reduced from 2010 to 2014. In the same way, the employment ratio rose between 2010 and 2014. Figure 3: Civilian employment and unemployment rates The American population is comprised of a population that is aging slowly. As a consequence, majority of the citizens are either retiring together with departing the workforce. This implies that they are not in the labor force. Studies have also demonstrated the between 2010 and 2014, the job mixes shifted more to full-time and by September 2014 with an estimated 3.7 million while the part-time jobs were 3 million. In spite of more people being in full-time employment, Farmer (122) sets forth the view that most employers make their expenses more variable by means of part-time staff that offers them more flexibility in matching costs to revenue. According to the U.S BLS, job creation in 2014 has been the best. From October 2010 to November 2014, the United States created over 8.5 million job opportunities. From January to November 2014, the United States has added an average of 215,000 jobs every month. It is projected that creation of jobs will average 280,000 by mid-2015 and 472,000 by 2020. Impact of domestic factors to unemployment rate There are various domestic factors which influence the American labor force as well as employment levels including innovation, cyclical and structural factors, economic growth, education and training, industry consolidation, and labor unions. Cyclical, frictional, and structural unemployment Unemployment can be cyclical, frictional, or structural (McEachern 23). A reduction in employment in several industries can be cycle. In 2010, after the global recession, most industries had reduced employment opportunities. In the U.S, the changes in unemployment between 2010 and 2014 were 70 percent cyclical. Cyclical sensitive companies, like the construction and manufacturing firms reported great job losses. Cyclical unemployment also occurs due to the ups and downs of the economy. For example, the Great Depression caused an upsurge of unemployment and when it stabilized employment rates started to rise again. On the other hand, a mismatch of skills for the available jobs may be structural. Major advances in technology and finding lower costs of labor overseas results in this type of unemployment. Therefore, when workers lose their jobs as a result of their skills being obsolete or their jobs were transferred to other nations, they are considered as structurally unemployed. Furthermore, frictional unemployment is described by Anderton (89) as the timeframe when workers search or change jobs. Frictional unemployment occurs due to the small turnover in the labor market and the period it takes for the workers to find new jobs. It is also referred to as search unemployment and in some instances it may be voluntary based on the situation of the employed person. In the labor market is common for the workers to change jobs. However, it usually takes time to combine the potential employees with new employers. It takes time for the workers to know about the new opportunities during which they are considered as frictionally unemployed. Frictional unemployment is present in any economy in the entire world. Demographics and labor participation rates Demographics, as noted by Remer (36), not only affect the labor force but also the employment statistics. Since the American population is aging as the Baby Boomers move into retirement, more people are leaving the labor force. Moreover, others are moving into an age bracket which has a lower labor force participation rate. Between 2010 and 2014, there has been a decline in labor force participation. This has been attributed to the increase in participation rate of those aged 16 to 24 years. In this perspective, there has been a significant improvement in the civilian employment of persons aged between 16 to 25 years. Figure 4: Civilian employment and labor force. As of November 2014, the unemployment rates for adult women were 5.1 percent and blacks 10.5 percent decreased from 6.1 percent and 11.8 percent in 2010, respectively. The unemployment rates among the teenagers have also reduced by 21 percent. In the last one year, the number of long-term unemployed people has reduced to 1.2 million. People with higher education levels face very low rates of unemployment. A recent study found out that for workers aged 25 years or more, the unemployment rate was 4% for those with a bachelors degree or higher, 6% for those with a degree, 9% for high school graduates; and 12% for those with less than a high school diploma. The lower the education levels, the higher the unemployment rates. Figure 5: Education and training Long-term employment Walton and Rockoff (31) asserts that long-term employment is whereby people stay without jobs for over 27 weeks as they actively search for employment. As of April 2010, the ratio of long-term unemployed was 48.1 percent which has gradually fallen to 30.1 percent as of November 2014. Most economists argue that in the long-run, long-term employment can actually be transformed to structural unemployment. This means that huge numbers of people will have their skills rendered obsolete as they stay without employment. In 2012, over 800,000 people wanted jobs, although they had given up on searching. The reduction in long-term employment through re-training of workers as well as providing education assistance has increased employment opportunities between 2010 and 2014. Figure 6: Duration of unemployment. Labor unions The labor unions are synonymous with giving workers more power in negotiating. However, between 2010 and 2014, in the U.S, participation in the labor unions has reduced. According to the Bureau of Labor Statistics, in 2014, the percentage of employees who were union members reduced from 13.1 percent in 2010 to 10.9 percent in 2014. Full employment In the recent past, the United States has been focusing on full employment as a policy priority. This has ensured as many people as possible are employed on a full-time basis. However, majority of the American employers are shifting the composition of the workforce to part-time workers from full-time employees. The percentage of part-time workers has increased from 17.4 percent in 2010 to 20.1 percent in 2014. However, surveys have indicated that most people do not prefer part-time employment. Figure 7: People in full-time and part-time employment Government hiring trends From 2013, states as well as municipalities started to add workers for the first time in five years. A study conducted in early 2014 revealed that in the last four years, the local and state governments have increased civilian employment by about 400,000 jobs. As a result, the unemployment rates have reduced by November 2014. Influence of global factors on unemployment rate in the US Offshoring of employment Most of the American companies are relocating to low-cost labor nations, such as, India. Research has demonstrated that offshoring is a source of uncertainty in the labor force. By 2014, about 30 million jobs were offshorable. This has left numerous Americans without jobs. Trade deficit Studies have demonstrated that an increase in trade deficit has reduced the unemployment rates from 2010 to 2014. Initially, a significant amount of money went into purchase of the overvalued houses. An increase in trade deficit reduced the interest rates enabling the business community to borrow money so as to expand their operations. More employment were created reducing the unemployment rate. Innovation In the United States, the smaller firms have been the major job creators. Innovation has resulted in globalization. As a result, globalization is shifting income to those with the highest educational knowledge and skills. For example, in 2011, Apple employed about 43,000 American citizens with 20,000 from overseas. Unemployment in Japan In Japan, the unemployment rate is usually reported by the Ministry of Internal Affairs and Communications (Flath 17). Unlike the United States, in Japan, the rate of unemployment measures the number of persons who are actively searching for a job as a percentage of the labor force. Japan has one of the lowest unemployment rates globally. According to the Ministry of Internal Affairs and Communications estimates, as November 2014, the rate of unemployment was 3.50 percent down from 5.60 in 2013. The 3.5 percent is the best the nation has attained since the Asian crisis. Regular employment in Japan has grown by 9.4 percent between 2010 and 2014. The unemployment rate has reduced from 4.4 in 2011 to 3.5 in 2014. This implies that the unemployment rates in Japan have been reducing from 2010 to 2014. Figure 8: Unemployment rates in Japan between 2011 and 2014. In Japan, there were 63,550 employed persons down from 63,660 in 2013. As of November 2014, they were 2,340 unemployed people compared to 2,370 in 2013. However, the job vacancies reduced from 828.88 in 2013 to 825.99 in 2014. The youth unemployment rate increased from 6.3 percent in 2013 to 7.20 percent. Despite the increase, it remains lower that the United State’s youth unemployment rate of 17.7 percent. Japan has also high vacancy. The ratio of the job offers to the applicants was the highest since June 1992. While based on BLS, the civilian labor force participation rate in the United States was 62.8 percent, labor force participation rate was 59.70 as November 2014. Moreover, the American unemployment-population ratio was 59.2 percent while the unemployment ratio in Japan was 54.6 percent as of November 2014. The wages for the Japanese workers increased from 298.19 in 2013 to 300.44 in 2014. According to the U.S Census Bureau, the average retirement age is 62. On the other hand, the Ministry of Internal Affairs and Communications stipulates that the average retirement age for the Japanese workers is 61. Figure 9: Unemployment rates in 10 countries According to the BLS, Japan has the lowest rates of unemployment as compared to the United States, Canada, Australia, France, Germany, Italy, Netherlands, Sweden, and the United Kingdom The rate of unemployment in Japan averaged 2.71 percent from the 1950s to 2014. It reached an all time high of 5.60 in 2009. However, from 2010 the unemployment rate was 5.2 percent and by 2014, the unemployment rate in Japan reduced to 3.7 percent in January to 3.5 percent in November 2014. Figure 10: Unemployment rate from January to November 2014. In the month of October 2014, the seasonally adjusted unemployment rate of Japan reduced to 3.5 percent from 3.6 percent the previous month. The availability of jobs also increased. In Japan, the number of people who were employed as of October 2014 was 63.9 million. This was a 0.4 percent increase or 240,000 people from 2013. Following this further, in September, the jobs-to-applicants ratio was 1.1, an increase from 1.09 the previous. This implies that chances of the Japanese being employed were very high. According to the Ministry of Internal Affairs and Communications the number of new jobs offers increased by 1.1 percent from the previous year. Weissmann (164) affirms that even though the Japanese economy is contracting, the rate of unemployment is still 3.5 percent. Weissman further argues that unlike the American recession which lead to high joblessness, the Japanese recession always maintained an extremely low-unemployment. As cited Drysdale and Gower (67), unemployment in Japan is trending gradually down. Part of the decline in the rates of unemployment is as a result of the natural response to the largely export driven economy. Recently, Japan has been enjoying an economic boom. However, the incidences of unemployment just like the United States are caused by an aging population. Besides, the Japanese population is gradually declining which will affect the employment sector in future. Unemployment is also caused by an increase of immigrants who come to search for work. According to the Ministry of Internal Affairs and Communications, between 2010 and 2014, the Japanese working population has been increasing. This feature is attributed to the growing proportions of the population in the older age groups. Currently, the life expectancy in Japan is 78 years. Is it projected that the life expectancy will be above 83 years for people who were born between 2010 and 2014. Since the Japanese are fairly long-living, the participation rates in the higher age groups are high by international standards as compared to the American population. As of January 2010, there were 32,755,000 full-time employees, which reduced to 25,770,000 in September 2014. Generally, in the last ten years the number of full-time jobs has actually reduced by about 2 million jobs. On the other hand, the part-time jobs have increased from 21,352,000, on April 2010 to over 41,200,000 as of November 2014 which is double the figure. In Japan the causes of unemployment include frictional unemployment which is the unemployment that is caused by people taking time shift between jobs, structural unemployment which is the mismatch of the skills in the labor market, long-term employment, voluntary employment where individuals choose to remain unemployed and cyclical employment due to the ups and downs in the economic environment. In this perspective, the Asian crisis significantly affected Japan most people remained unemployed till the economy regained stability (Flath 34-46). Similarities between the two nations In both nations the rate of unemployment are reducing since 2014. In both countries the employment sector was significantly affected by the global recessions which increased the rate of unemployment. About job creation, in both Japan and the United States and between 2010 and 2014, the number of job opportunities increased gradually thus reducing the rate of unemployment in the last four years. Furthermore, in both nations unemployment rates are below 6 percent as of November 2014. The next similarity is that in both nations the retirement age for both men and women is below 61 years. The next similarity is that unemployment rates for both nations as of November 2014 were lower than the rates in 2010. Both nations have experienced increased unemployment rates due to immigration. In both the United States and Japan, there has been a decrease in unemployment rates as shown in figure 11 below. The number of people being employed in both nations has been increasing over the years, especially between 2010 and 2014. Figure 11: Unemployment in the U.S and Japan. Solutions to creating more jobs Infrastructure investment: Construction of bridges, roads, electricity grid, and other public facilities has been found to create millions of job opportunities. Tax reform: The removal of higher taxes may encourage the employers to expand their businesses and consumers to spend. In addition, reducing the costs of workers also encourages the employers to hire more people. Healthcare cost reduction: Most businesses pay very high health care costs for their employees. Reduction in health care costs decreases the cost of hiring along with maintaining the workforce. Energy policy and carbon price certainty: Most people are usually split on either protecting the environment or promoting economic growth. The governments need to ensure that they give incentives for investment in clean energy by tackling the regulatory uncertainty that surrounds price of carbon. The governments can also construct energy efficient homes. Reducing the cost of hiring employees will make employers recruit more people. Employment policies and minimum wage: The minimum wage in both countries needs to be raised to as to provide households with enough money to spend. Education and training: Since people with education have low unemployment rates, education needs to be made more affordable as well as attuning to the jobs’ requirements. In the same way, considering that most people cannot afford college education, the governments can subsidize college education to make it affordable. Besides that, in order to alleviate structural unemployment re-training programs are supposed to be initiated. Trade policy: Creation of a level playing field with the trading partners could assist create more jobs in the United States and Japan. These nations need to allow their currencies to float freely on international markets that would reduce trade deficits. As a result, jobs would be added in the countries. Long-term unemployment can be addressed by reducing the marginal cost to businesses. In the long-run, structural reforms, for instance, the re-training of workers or provision of education would assist reduce the long-term unemployment. Conclusion Due to the recent increase of unemployment rates, most people are of the belief that creation of jobs needs to be most essential government priority. Unemployment occurs when people do not have work but they are actively looking for work. Unemployment rate is a measure of the unemployment occurrence. In both Japan and U.S, the causes of unemployment include structural, cyclical, frictional, long-term, and hidden unemployment. The rate of unemployment is impacted by various factors including demographics, economic conditions, education, global competition, and use of machines. These factors have been found to influence the wage levels, number of workers, and duration of employment. Unemployment often reduces during the periods of economic boom and rises during recession periods. Both are creating job opportunities to reduce the unemployment rate. As evidenced, the unemployment rates in both nations are reducing since 2010 until now. However, Japan is among the nations with the lowest unemployment rates across the world. Works Cited Anderton, Alain. Economics. Ormskirk: Causeway, 2010. Print. Beaudreau, Bernard. Mass Production, the Stock Market Crash and the Great Depression. New York, Lincoln, Shanghi: Authors Choice Press, 2012. Print. Brynjolfsson, Erik, and McAfee, Andrew. Race Against the Machine. Digital Frontier Press, 2011. Print. Drysdale, Peter and ‎Luke Gower. The Japanese Economy: Macroeconomic policy and conditions. New York: Greenwood Publishing, 2013. Print. Farmer, Roger. Unemployment, Cincinnati: South-Western, 2011. Print.   Flath, G. The Japanese Economy, Oxford: Oxford University Press, 2013. Print. Henshall, D. A History of Japan, New York: Palgrave Macmillan, 2013. Print. Lebergott, Stanley. Manpower in Economic Growth: The American Record, New York: McGraw-Hill, 2014. Print. McEachern, William. Economics: A Contemporary Introduction. New York: John Wiley & Sons, 2012. Print. Remer, David. Unemployment, New York: McGraw-Hill, 2011. pp. 456–512. Walton, Gary, and Rockoff, Hugh. History of the American Economy. New York: Cengage Learning, 2013. Print. Trading Economics. (2014). United States Unemployment Rate: Retrieved December 14, 2014, from http://www.tradingeconomics.com/united-states/unemployment-rate United States Department of Labor. (2014, December 13). Labor Force Statistics from the Current Population Survey: Retrieved December 14, 2014, from http://data.bls.gov/timeseries/LNS14000000 Weissmann, J. (2014). Japan Falls Into Recession, Still Has 3.6 Percent Unemployment and a 300 MPH Train: Retrieved December 14, 2014, from http://www.slate.com/blogs/moneybox/2014/11/17/japan_is_in_a_recession_why_is_its_unemployment_so_low.html Read More