Ememployment Case Study

1. Labor is an important factor of production for all firms. The most recent unemployment rate is estimated at 7.7%% (February 2013). Economists have identified three types of unemployment. Which type would affect your firm?

Frictional unemployment that occurs because it takes time for employers and workers to find each other, would not affect Microsoft too much. Microsoft is a major technical company with employment opportunities across the world. For this reason most people who are seeking employment in the technical field would probably apply for a job with Microsoft, thus giving Microsoft “the pick of the litter”. It would be the people that Microsoft didn’t hire who would become frictionally unemployed (Rittenberg & Tregarthen, 2014).

Structural unemployment results from a mismatch between worker qualifications and the characteristics employers require would be the one that would have the most effect on Microsoft. Technology changes and advancements happen almost hourly.

2. Think about other employment issues such as outsourcing. Do you think your firm would benefit from outsourcing?

Yes, Microsoft would and does benefit from outsourcing. A majority of Microsoft’s products are software based. This means that most of the customer service issues can be handled via long distance. With labor cost being lower in foreign countries, Microsoft would benefit greatly from the use of outsourced labor. Microsoft also benefits from outsourcing by way of the revenue they make from the sale of the various outsourcing software products they provide. These products help companies manage and operate their outsourcing operations (Microsoft, 2014).

3. If a U.S. firm hires foreign workers abroad, would these wages count in the U.S.