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Causes and Effects of Unemployment

11/18/2011 Suleyman Causes and Effects of Unemployment Unemployment rate is the litmus paper of a country’s economy, security and its overall production force. The more unemployment rate increases the more consumption rate decreases. Since many people are unemployed, their spending power struggles causing the economic wheel to stop rotating. High Unemployment rates indirectly induce a widespread of insecurity within the general population. Unemployment, which caused by many factors has had a painful impact on both social matters and American economy.

Its effects stay for a long periods and are widespread. To understand the depths of unemployment and how it affects regular citizens, it needs to discuss on the factors that caused high unemployment rates and the impact of unemployment on American society. To begin, unemployment was a problem that faced every civilization throughout history; the root however was different from one setting to another. In the United States the root of unemployment can be traced back to major companies moving overseas.

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Before the recession, many prominent companies synchronized their relocation plan and moved out of the United States into other countries where employment was cheaper and the market is less regulated. This was the root cause of the trouble which made many people unemployed. Immediately the unilateral decision of the companies caused stressful living standard on many employees who lost their primary source of income. For example, many of these people were kicked out of their living places after they could not able to pay monthly rent. Also many of them lost their health insurance, which they used to get through their employers.

The decision that companies reached in order to make more profit caused painful consequences on American people and causes the recession that still haunts our economy. Moreover, housing construction and service industry jobs which most of American people used to earn money had completely stopped. Again this was another bullet directed to stop one of the money making engines, because it led many companies to stop their production or made them impossible to pay employee dues or even facility expenses and eventually led them to run out of business.

For instance many small companies, which used to fabricate construction tools, had stopped their production or reached a point where they could not get any profit out of their production. In addition to this, it caused to hold back the service industry. Lack of construction jobs lead the companies that used to rent heavy equipments which intended for construction use only are in dilemma to stop the service, although they have to maintain the payment of the heavy equipment which they previously have it as a loan or file bankruptcy.

During the recession, unfortunately the senate had passed a notion in a favor of the big companies to get a tax credit. This bill resulted to both federal and local governments collecting less tax, because most of outstanding businesses that currently function in the United States hired lobbyist to get tax deductions and other companies choosing with overseas operations. This restricted job creation chances for federal and local governments. Since less tax is deducted, federal government didn’t have enough funds to create more jobs.

Soon after, the government spending become limited and the people kept filling out the unemployment forms on daily basis which causes the unemployment rate to increase. Moving on, many natural and financial disasters that happened simultaneously and successively had caused the unemployment rate to increase dramatically. Hurricanes such as Katrina and others costed billions of dollars and the federal government paid billions of dollars to deal with the situation. While these natural disasters were taking place, the nation was also hit with financial turmoil that swept many large financial institutions.

Many big corporate banks asked from federal government to receive bailout money after spending billions of dollars for insurance claims. This was also one of the causes that led the country into recession and caused the economy of the country to suffer. The fragile US economy could not withstand the high cost of that damage and started to respond unpunctually to overcome unemployment rate increase. In terms of social impact, unemployment affects the society in ways greater than the expected.

Today many Americans believe that they can’t afford to get married because of financial inability. In the last four months 184,493 workers had claimed unemployment. This statistic, which (“Bureau of Labor Statistics”) released third quarter of 2011, seems shocking although a few years ago the rate was more than double. The more layoffs being given is the more people start to abstain from marriage. This is directly touching our social issue. As a consequence, many couples decided to live as friends until they get reliable source of income.

Unemployment had scarcely affected or ruined the dream of new American families towards prospective marriage which creates a sense of instability towards the future. Furthermore, the most prominent articles in the media were crimes committed, business robbed or many shop lift incidents, this high crime rate relates directly to the rise of an unemployment rate. Although the crimes have not affected equally on every city in the United States, yet the crime rate had doubled on bigger cities especially the cities that had the highest rate of unemployment.

Few months ago, a report made by Uniform Crime Report shows that crime rate had increased into 2. 5%. This number is climbing to reach the worst, and as the result of this, it may have painful consequences. Many small businesses had already faced stressful situations after alarming report of robbery in their neighborhood, although these statistics report is ominous trend but in reality they are being witnessed. At the end, unemployment which had a painful impact on American people had been caused by many factors.

American workers started to claim unemployment when many companies moved out of states to find lower paid workers in foreign countries. Although there were some natural disasters like Katarina which federal government spent billions of dollars, but the unemployment had increased when the currently function companies demand to get tax credit. That reason had granted to federal government unearned any tax from these companies. Furthermore, all construction jobs and service industry had stopped.

As a result, it caused 184,493 workers claimed for unemployment for the first four months of this year only and many employees left out in their houses stressed how to pay their rent or to find health insurance. Since the unemployment is alarming issue, federal government must come up a good strategy of creating new jobs. This attempt will give a hope millions of Americans who abstained from marriage due to the lack of income or many small businesses which faced stressful situation because of successive robbery in their neighborhood.

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