The rate of unemployment in the United States has been relatively high. At the same time, so has the lack of economic opportunity, which has exacerbated the effects of low employment (US Bureau of Labor Statistics, 2020). This situation has negatively impacted millions of American youths seeking better work opportunities, personal opportunities, and professional lifestyles. According to the U.S. Bureau of Labor Statistics, there has been a recent drop in the high unemployment rate, placing it at 11 % (US Bureau of Labor Statistics, 2020). These recent developments have been a result of the U.S. government's effort to provide more job opportunities and empowering American youth economically. However, there are still millions of workers, most of whom are skilled, who cannot participate in the labor market, or contribute to the economy. The situation is mirrored across the globe, as many other governments are failing to invest in employment and improving their economic infrastructure to better provide for the youth in their population. Research on the issue of economic opportunity and unemployment is plentiful, but there is relatively little documentation on potential fixes on the situation or successful interventions that have worked. Furthermore, little is being done to assist those in the labor market and to safeguard those that are yet to join it. The reduction of the unemployment rate requires the implementation of strategies that improve economic opportunity for all. These two elements are irrevocably linked. In this paper, the impact of unemployment and the lack of economic opportunity on people will be examined, and potential solutions to this crisis will be recommended. This paper posits that unemployment and lack of economic opportunity are linked to poor economic infrastructure.
Background of the Study
Unemployment is a global issue affecting most, if not all, economies worldwide. It is defined as a situation where skilled workers who are actively searching for a job are unable to find one. This can apply to workers for whom appropriate positions are not open or vacant. It can also apply where skilled employable people with cannot find an appropriate position to fill. Unemployment is linked to economic status, as unemployment is an indication of the economy's strength and health.
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There are several unemployment types. The first is that US residents have become familiar with over the past decade, which is demand-deficient unemployment. This is usually the main cause of unemployment and is related to the economic status of a country. It is, therefore, heavily associated with recessions. A reduction in demand for a certain company's services creates cuts in their production. As a result, the workforce is diminished in size, and workers are laid off. After the 2007-2009 recession, demand-deficient unemployment became a common occurrence in the U.S. With the recent COVID-19 epidemic, there are also predictions that demand-deficient unemployment will rise, as several corporations experience diminished demand for their products and services ( Zaman et al., 2020). Thus, this is an area for government officials to focus on now.
Another type of unemployment is frictional unemployment, which refers to employees in-between occupations without a recession. This refers to cases where the worker resigned or was dismissed, and is looking for alternative, more suitable employment. Structural unemployment refers to unemployment occurring one’s skill set does not match up to the available jobs. It is also applicable to situations where the employee cannot access the geographical location where an appropriate vacancy is available. An example is the inability to secure a visa to work in a country where they have obtained an appropriate job. Lastly, there is voluntary unemployment. This refers to situations where workers leave jobs that are no longer fulfilling to them on a financial level, or continuing to be in the workforce is no longer desirable.. In such situations, the workers search for alternative economic opportunities.
Causes and Effects of Unemployment
Unemployment is a universal issue because it is the product of elements present in all economies. One of these is uncertainty. Although the whole world was affected, the United States is no different was perhaps even more affected by these issues as a result of the Great Recession of 2007 to 2009. Periods of recession plunge countries into several economic issues, including increased unemployment rates. This has been the case in the American labor market for the past decade (Schaal, 2017). A variety of factors form uncertainty at the economic level. One of them is volatility, which is strongly associated with employment decisions and reallocation in the labor market. Increased levels of uncertainty in the economy are associated with high volatility. This increases the unemployment rate by making firms reluctant to invest in growth, infrastructure, or employment. In economically volatile situations, research shows that firms will choose to wait for the uncertainty out rather than invest (Schaal, 2017). As a result, this reluctance to invest stunts growth, and creates a situation where the rate of unemployment increases. Uncertainty also contributes to the lack of economic opportunity, as low investment reduces the amount of economic opportunity available in the market.
Unemployment can also be tied to cultural factors. On a global scale, several patriarchal cultures do not provide women with the same educational or professional opportunities as men. This impacts their ability to acquire gainful employment or access employment opportunities. Another common factor can be political factors within the environment, such as prolonged conflict or poor governance, which would contribute to the devolution of systems that would support or foster employment. While these factors are not prevalent in the US, they are important to consider, as they can shed light on the mechanisms of indirect causes of unemployment.
The skill gap is another important source of unemployment and deprived accessibility to economic opportunity. The skill gap is a feature common in developing nations, and it refers to the gap between the skills that employers desire and the skills available within the workforce. One case study carried out in Nigeria demonstrated how the skill gap was instrumental to the continuing increase in unemployment among the youth (Oviawe, 2017). The skill gap continues to be a big feature in unemployment rates across the world, even as school enrollment and literacy increases. Despite the presence of technical and academic skills, employees have to acquire soft skills as well, including effective communication and problem-solving.
Unemployment negatively affects the population, especially the youth, who form the highest proportion of the workforce. On a personal level, young people that are unable to find work often feel isolated from society. This contributes to discontent within the populace. Furthermore, it psychologically harms the displaced workers, as they experience economic disruption and strain, and social withdrawal (Brand, 2015). Research shows that displaced workers suffer from lowered self-esteem due to the strain placed on them by their situation (Brand, 2015). This is compounded by the loss of psychosocial assets associated with job loss, such as the loss of autonomy and financial freedom.
On a national level, unemployment and the deficit in economic opportunity harm a country's economic growth rate (Soylu et al., 2018). Smaller workforces decrease the tax revenue that a government receives, and a lower productivity level across the country. This harms the GDP and increases government spending on the social benefits that the unemployed residents rely on for survival.
Recommendations
Solving the issue of unemployment and the lack of economic opportunity depends on pushing initiatives and strategies that will open up more economic and employment opportunities. One potential strategy is a higher investment in vocational and technical education. The skills gap remains a big feature of unemployment regardless of the state of an economy, whether in a developed or a developing country. Investing in the vocational education system would assist in bridging this skills gap by increasing the variety and technicality of the skills available to employers in the labor market. It would also benefit the gap in soft skills in most labor markets worldwide, including that of developed countries (Oviawe et al., 2017). The U.S., particularly, can follow China's example as a developed country that has used vocational education to successfully lower the unemployment rate and provide much-needed skills to fill the gap in the labor market (Stewart, 2015). Global economic trends show that there is a gap in the supply of non-academic skills, and the investment in this educational system would bridge the gap.
The promotion of self-employment is another relevant solution for the reduction of the unemployment rate. This solution would also increase economic opportunity for those who are not in employment but can still contribute to the economy through entrepreneurship. Governments that promote entrepreneurship can address the needs of countless youth that are undergoing challenges with finding employment. Current policies and programs in most countries do not adequately address the challenges of entrepreneurship (Cho et al., 2016). These challenges are not only financial – many entrepreneurs willing and ready to start a business are lacking the skills necessary to manage their new businesses. The creation of means to train and support entrepreneurs would benefit governments by lowering unemployment, increasing revenue, and increasing the GDP. This would benefit all stakeholders involved. Therefore, the formulation and implementation of programs and policies that boost self-employment are essential to solving the unemployment and economic opportunity issues in all countries. Sourcing assistance from entrepreneurship groups and citizens' input would be paramount to ensuring such policies' success and efficiency.
With COVID-19 currently affecting unemployment, both investing into vocational and technical education systems as well as promoting self-employment could positively affect the labor market going forward. Few big employers will be able to recover from the financial strain that COVID-19 has placed on them. Thus, retrenched workers are not likely to be re-hired after the public health crisis has diminished in severity. In this case, promoting self-employment and acquiring vocational skills to boost employability is the best route to take
Conclusion
The ongoing COVID-19 pandemic has not just been harmful to physical health but also economic health. Millions of people have lost their jobs due to the impact that the social distancing measures, travel restrictions, and import/export complications caused by COVID-19 have had on the labor market. These complications, along with the already relatively high 11% unemployment rate present in the U.S, have placed even more pressure on the government to create economic opportunities and jobs for its people. The main causes of unemployment are economic uncertainty, the skill gap, and adverse political or cultural conditions. As economic uncertainty and the skill gap are especially relevant to the U.S., the recommendations provided in this paper seek to address them expressly. Investing in the vocational and technical education system and fostering self-employment, will bridge the skill gap and stabilize the economy by boosting productivity, which will lower uncertainty.
References
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