Sample Paper on Unemployment Level in the United States

Decreasing the Unemployment Level in the United States

Project Summary

This detailed summary explains the problem statement that the project will cover. It aims at highlighting an introduction of the project that gives the reader an insight of the study delineated in the main project. In light of this, microeconomics is a field or branch of economics that deals with the framework, decision-making, and the behavior of the aggregate economy (McConnell, 2010). Virtually, macroeconomics looks at the entire scope of economy and factors that influence its performance such as growth, inflation, unemployment, interest rates, technology advancement, international trade, and exchange rates among others (McConnell, 2010). These factors influence the behavior of external economy in a certain specified region (McConnell, 2010). This field of macroeconomics shapes the behavior in which the whole economy runs in shaping a country’s economic performance. The first step in this project will involve understanding the meaning of unemployment before exploring its causes, consequences, and policies to reduce lack of jobs (Hornstein & Lubik, 2010). Therefore, the thesis statement of the research is exploring the measures that the economists took to decrease the unemployment level in the United States

Various current issues in the macroeconomics influence its performance and scholars review them from time to time. Unemployment is a global menace that poses adverse effects to the progressive business cycle. It refers to the state in which people are actively looking for work and it is inadequate (Hornstein & Lubik, 2010). The International Labor Organization reported that more than 197 million people were practically unemployed in 2012 (CES, 2014). In 2010, approximately 10% of the population in the United States was unemployed (McConnell, 2010). According to the United States Bureau of Labor Statistic, the rate of unemployment declined to 7.4% or 12 million people in 2013 while the government’s broader U-6 unemployment rate amounted to 14.3% (CES, 2014). Based on these statistics, there is a clear indication that high level of unemployed people is gradually decreasing in the United States of America (CES, 2014). According to the wall street journal, the number of job openings has increased for the past seven years as demonstrated by the reduction of joblessness as indicated in the U.S Bureau of Labor Statistics. The Job Openings and Labor Turnover (JOLTS) indicate that job openings climbed to 4.5 million from 2008 after the great recession (McConnell, 2010). The rise can be attributed to the economic measures adapted by the government.

The increased employment levels or job openings are current macroeconomic issues that require being addressed (Hornstein & Lubik, 2010). Therefore, the main purpose of this study is to explore the unemployment issue in general creating emphasizes on the economic control measures that are enacted to reduce this plaque (Hornstein & Lubik, 2010). It is quite evident that the employment rate is facing an upward trend in the United States. Therefore, it is important to delve into the reasons and activities that lead to this achievement. In fact, the Wall Street Journal reported on June that the U.S job openings have reached its highest point this year since 2008. It shows that there are tremendous improvements on forces that shape the economy growth (Hornstein & Lubik, 2010). During the recession between the year 2007 and 2008, the number of unemployed people skyrocketed posing great economical threats to the country (Hornstein & Lubik, 2010). As a result, the federal government enacted ways that aimed to curb the rising menace of unemployment. One of these ways includes lowering the interest rates to increase investments that foster employment. Elsewhere, the project looks at the importance of decreasing the unemployment level in the country and the economic contribution it makes to foster growth (McConnell, 2010). It aims at delving deeper in to the reasons that made economists concentrate on increasing the factors that led to an increase in the rate of job openings. The main issue here involves understanding the forces that leads to an augment in job openings.

The project also looks at unemployment in depth; it highlights the causes of unemployment. Lack of jobs is an economical dilemma that has been cited every time and it is important to understand the causes so that its occurrence can prevent (Hornstein & Lubik, 2010). Similarly, the study will outline the dire consequences brought by high-unemployment rates. The disadvantages of unemployment also affect the economic growth and productivity of a country. This project will be of help to an array of people ranging from the undergraduate scholars to the researchers (Hornstein & Lubik, 2010). Scholars will gain from the project, as they will get an insight of the economical impacts of unemployment. Researchers will also benefit by recommending the government on how to address the unemployment issue based on findings of this project. In addition, it will foster other related studies that will be aimed at analyzing the findings of that project. Finally, the project will enable the researcher to gain more understanding in the macroeconomics field and the issue of unemployment in particular.



Current Employment Statistics – CES (National). (2014). Bureau of Labor Statistics. Retrieved from:

Hornstein, A., & Lubik, T. A. (2010). The rise in long-term unemployment: Potential causes and implications. (). Richmond: Federal Reserve Bank of Richmond. Retrieved from

McConnell, C. R., Brue, S. L., Flynn, S. M., & Barbiero, T. P. (2010).Macroeconomics. McGraw-Hill Ryerson.

U.S. Job Openings Climb to Highest Level in Seven Years. The wall street journal (10 June 2014). Retrieved from:


Decreasing the Unemployment Level in the United States


Unemployment occurs when an individual who has attained the working age and is willing to work, actively looks for job but the efforts comes to naught (Cebula & Fergie, 2012). In most cases, unemployment occurs due to inadequacy of job opportunities or the involuntary idleness (Layard et al., 2005). The Bureau of Labor Statistics defines unemployment as when people lack jobs, and they are available for work, and they have actively looked for work in the past four weeks without success and it includes people who are temporary laid off from work (Abaidoo, 2012). It is dire case that onslaughts consequences to the entire society including the economic status of the region. Virtually, unemployment is caused when the economy slows down, and businesses are forced to cut costs by reducing wages and salaries expenses (Layard et al., 2005).

According to the International Labor Organization, around 197 million were unemployed in the entire globe in the year 2012. The United States of America contributed approximately 12 million people to the unemployed figure based on the report by the U.S Bureau of Labor and Statistics. The rate of unemployment was highest during the great depression that ended in the year 2008 that hit the country by a storm (McConnell et al., 2010). As a result, the economists employed relevant measures to curb this menace of unemployment to aid the economy recuperate from the recession (Pissarides, 2000). Therefore, this study intends to unearth the measures that the economists took to decrease the unemployment level in the United States. In addition, it delineates the causes of unemployment, disadvantages of unemployment, and the importance of reducing the unemployment to the economy.

Types and causes of unemployment

Unemployment appears in different nature and category depending on their cause. Cyclical unemployment occurs when there is a fluctuation in growth patterns and production trend. When the business growth is high, cyclical unemployment is usually low and the vice versa (Cebula & Fergie, 2012). The main determinant of this type of employment lies on the demand for organizations to absorb employees. Secondly, people cause structural unemployment when they choose to shift the location, careers, and jobs. It is influenced by an individual wish to satisfy his or her wants and the mismatch between the available labor force, skills, and work demands (Adela, 2009). Frictional unemployment on the other hand is a result of shift in commodity demand. For example, if the demand of desktops computers shifts to laptops, the desktop manufacturer becomes bankrupt and their employees jobless. Eventually, seasonal unemployment occurs due to changes in seasons; for instance, changes in weather and climatic conditions (Abaidoo, 2012).

On the other hand, unemployment is a result of various factors in the economic status of the country. One of the most current issues that cause unemployment is the advancement in technology (Layard et al., 2005). Organizations are inventing machines and robots to handle manual and professional work in the firms. As a result, tasks machines that offer a substitute to human resource are replacing workers at a high rate. In a free market, companies and corporations offer stiff competition and when one of the companies exhausts, it opts to lay off some of its workers. Economy slowdowns such as the great recession and depression largely affect the productivity of companies, which is reflected by low employee absorption (Layard et al., 2005). Political instability and weakness in the government affects investment; hence, the rate of employment is always low. In some instances, poverty, lack of education and relevant skills results to lack of jobs (Cebula & Fergie, 2012). Weather conditions and climatic factors also contribute in rendering people jobless. Adverse climatic conditions affect economic activities such as agribusiness and transport industries making people unemployed. Similarly, economic factors such as inflation, high interest rates, and negative balance of trade among others are major causes of unemployment.

Consequences of unemployment

            The main method that the government earns revenue is through imposing taxes, levies, and tariffs. High unemployment rate results to loss of revenue because there is lower revenue gained from income tax (Cebula & Fergie, 2012). Revenue earned through taxation helps in development, constructing social amenities, and feeding the government expenditures to increase the population’s living standards. The other disadvantage of unemployment is the loss of output where many people are willing to work but jobs are unavailable. In such situations, productivity is low leading to country incompetence in the international standards (Cebula & Fergie, 2012).

It can also make the country vulnerable to labor poaching from other countries. In a region where the unemployment level is high, the government spending increases to salvage the social issues that arise when people are idle. For example, the crime rate is usually high, sicknesses, and mental health problems, illegal business such as drug trafficking that subjects the government into extra expenditure (Pissarides, 2000). Similarly, unemployment deprives the living standards because people do not have income to spend leading to a high illiteracy levels. The government may be forced to spend on job seeker’s allowance meaning that it would reduce financing the key areas such as health (Abaidoo, 2012). Lastly, unemployment causes hysteresis where people stay for a long time without jobs; hence, they do not gain experience and their skills become irrelevant.

Policies of reducing unemployment

            This section presents the relevant policies and control measures that the government takes to reduce the unemployment level. The policies are outlined according to the type of unemployment category.

  • Reducing cyclical employment

Economists explain that cyclical unemployment is caused by a decrease in aggregate demand. Macroeconomics policies such as fiscal and monetary policies are usually employed to increase the level of aggregate demand. The monetary policies include lowering of the interest rates or the public borrowing (McConnell et al., 2010). In this case, the central bank reduces the base interest rate; hence, the reduction reflects in the commercial banks (Abaidoo, 2012). Cheaper borrowing rates attract investors to apply for loans to invest. As a result, there are higher rates of spending and investments, which lead to increase in aggregate demand. Similarly, low interest rates reflect on the mortgage interest payments because they leave householders with more disposable income to spend (McConnell et al., 2010). The asset prices also falls attracting more people to buy assets. Lower interest rates leads to depreciation in the exchange rate making imports more expensive than the exports and the same case apply to labor exports (Dixit & Lambertini, 2003). Monetary policy ensures there is more disposable income to spend among the people; hence, firms are willing to offer more jobs to the population.

According to McConnell et al. (2010), fiscal policy on the other hand affects taxation and the public spending in general. Tax rates are decreased and the government reduces its spending. For example, the government enacted the American Taxpayer Relief Act of 2012 to curb the increased taxation in that year (Abaidoo, 2012). Such an act prevents the economy subduing to inflation and unnecessary government spending. However, the fiscal policy can be harmful to the economy when there is too much money at disposal meaning the value of the currency deprives. The government can again apply the fiscal policy to siphon the excess money from the public; therefore, fiscal policy is applied at a balanced state in order to reduce cyclical unemployment (Adela, 2009).

  • Reducing structural unemployment

The government can reduce such type of unemployment by providing training programs to the structurally unemployed. Education enables people to match their skills with the available job requirements (Di Tella, 2001). Additionally, working people can enroll in institutions of higher learning to meet their job demands and be competitive. Elsewhere, the government can pay subsidies to the displaced workers to sustain their livelihoods (McConnell et al., 2010). Laborers may be helped to shift to the locations they feel comfortable to work in maybe through job transfers. In addition, the government can offer tax subsidies to companies that accept to shift into areas whose have high unemployment rates. Eventually, the government can set up training facilities for workers to upgrade their skills and access job information. These methods will improve the geographical mobility because unemployed people usually concentrate in one region.

  • Reducing the frictional unemployment

Frictional unemployment is largely attributed to the emerging trends and technological advancement. Obsolescence of a technology or a modification of certain input machinery displaces the demand of one commodity to another. For instance, the manual typesetters were displaced by the printing production in the 21st century making the typesetters employees jobless (Abaidoo, 2012). Therefore, the government should always prepare both employees and employers in case of any technological advancement. It can provide the public with better information and implementing apprenticeship programs like in Austria and Germany.

  • Reducing seasonal unemployment

Seasonal unemployment is quite difficult to curb especially when it is attributed to weather conditions. However, people can be encouraged to save during the on-peak season to avoid the feeling of joblessness in the off-peak season (McConnell et al., 2010). Likewise, public awareness is an effective way to prepare people for such instances.

Importance of decreasing unemployment levels

Low unemployment level has an array of benefits to both the economic and social status of the country. To start with, the productivity of a country is very high; hence, it attains international competitiveness (Adela, 2009). In such a situation, firms are busy; savings and investments rates are high improving the overall economy (Cebula & Fergie, 2012). Secondly, workers have a great bargaining power for better salaries and wages. This is because there is little probability of replacing the employees as opposed to during the high unemployment rates. The third importance is that there is a reduced demand for exaggerated working welfare. When more people are employed, there are minimal chances of workers demanding for welfare; hence, the government can put more money into the integral areas such as hospitals (McConnell et al., 2010). Decreased unemployment levels leads to reduction in crime levels, and social immoralities such as commercial sex and drug trafficking. Unemployment causes psychological effects and physical disorders. Lack of jobs is associated with poverty, which leads to divorce, suicide, divisions in the society, and lack of self-esteem (McConnell et al., 2010). Consequently, the government gets more revenue by collecting taxes from a high number of people. Chances of frictional unemployment are reduced where people leave jobs to seek for better employment opportunities. In addition, the consumption rate is quite high; hence, there is increased demand for products that in turn fosters growth. Therefore, decreasing unemployment boosts people’s morale to live in confidence and it cultivates their confidence (Adela, 2009).


In labor market, the equilibrium in availability of jobs and potential employees strikes a balance in ensuring an economic growth. Therefore, in the United States the rate of employment and job openings is tremendously facing an upward trend reducing the unemployment level in the United States. For example, the U.S Bureau of Labor Statistics indicated that the rate of job openings climbed to 3.1% in April from 2.9% in March 2014. Similarly, the rates of layoffs decreased compared to the first quarterly employment report in 2013. The Federal Reserve officials claim that the turnover in labor market is facing a complete recovery; hence, the country should gain enough confidence in the economy and people can take a risk of acquiring new employees.

In this year (2014), the hiring level hit a 4.7 million people a month while 2.5 million people are leaving their jobs for other opportunities or through retirement. There are also several productive people putting their skills into practice and engaging in inventions and innovations. The unemployment level is generally attributed to the relentless efforts that the government has undertaken to create enough jobs. It has emphasized on vocational and technical trainings that increase the scope of job openings (McConnell et al., 2010). Similarly, the government incorporated expansionary policies that include the monetary and fiscal policies. These policies regulate the amount of money that is in circulation and disposable income that influences expenditure. Monetary policies involve lowering the interest rates to encourage borrowing so that people can increase on spending.

Fiscal policies on the other hand regulate the rates of taxation and the government spending. The government can lower taxation to encourage firms to employ more people by having much money at their disposal. Similarly, government activities such as construction of infrastructure create jobs to the public by offering tenders, manual work, and supervisory work among other types of employment (Di Tella, 2001). The government should create the public awareness about saving and investments to curb the overreliance in employment. This way, people will indulge in other forms of employment to satisfy their household needs and foster economic growth. Similarly, the rate of production will increase triggering the exportation rate that will in turn create a positive balance of trade. In conclusion, the unemployment levels have been a major challenge in the U.S economy for quite a while (Abaidoo, 2012). It has affected the GDP in the country especially during the great recession; however, effective measures have been put in place to salvage the situation. GDP growth and corporate profits are significant indicators in determining the likelihood of achieving lower employment rate (Adela, 2009). Therefore, proper economic policies help in decreasing the unemployment level in the United States.



Abaidoo, R. (2012). Corporate profit growth and variability in US unemployment rate. International Journal of Economics and Finance, 4(7), 3-14. Retrieved from

Adela N. (2009). Assessing the Effectiveness of Human Capital Investments on the RegionalUnemployment Rate in the United States: 1990 and 2000International Regional Science Review. vol. 32, 1: pp. 65-91

Cebula, R. J., & Feige, E. L. (2012). America’s unreported economy: Measuring the size, growth and determinants of income tax evasion in the U.S. Crime, Law and Social Change, 57(3), 265-285. doi:

Di Tella, R., MacCulloch, R. J., & Oswald, A. J. (2001). Preferences over inflation and unemployment: Evidence from surveys of happiness. American Economic Review91(1), 335-341.

Dixit, A., & Lambertini, L. (2003). Symbiosis of monetary and fiscal policies in a monetary union. Journal of International Economics60(2), 235-247.

Layard, R., Layard, P. R. G., Nickell, S. J., & Jackman, R. (2005).Unemployment: macroeconomic performance and the labour market. Oxford University Press.

McConnell, C. R., Brue, S. L., Flynn, S. M., & Barbiero, T. P. (2010).Macroeconomics. McGraw-Hill Ryerson.

Pissarides, C. A. (2000). Equilibrium unemployment theory. MIT p