Those who are employed will be severely affected in case of a rise in unemployment in the economy. Noticeably, reduction in wages and salary leads to decrease in the amount of tax collected on the income. This further hinders the scope of availability ... ... middle of paper ... ...l make the same salary that they had previously. This increases the debt owed by those families. Usually the amount of unemployment benefits is not enough to keep this cycle going.
When firms produce less, they need fewer employees. Several countries regardless of their economic status have experienced various degrees of unemployment since the economic downturn in 2007. The U.S economy had an unemployment rate of 9.2% as at June 2011, Egypt with a 19% unemployment rate and the Saudi economy of 10%. This is very costly economically because it represents a loss in the GDP. The classical theory analyzed by Pigou (1993) and Solow (1981) argues that the labor market consists of demand and supply of labor.
Through the 70's economic growth slowed, and the wealth gap widened. Middle-class families were now considered lower class. People relied on the government to help them out with welfare programs. The middle-class class was weakened and the gap grew and grew. There were periods of positive fluctuation, however the middle-class simply never regained it's status that was held in more prosperous times in the past.
Fertility is one of the main issues discussed when talking about the demography of the United States. The U.S. economy plays a rather large role in the rising and falling patterns of the country’s fertility rate. In many past occurrences of economic hardship in the country fertility levels had decreased. One of the main reasons for that being in times of financial struggle, men and women are less likely to want to have children. Being able to support a family is already a difficult task but when people are getting laid off from jobs, unemployment rates are increasing, and the economy is struggling many people can barely afford to buy necessities for themselves never mind for an entire family.
The theory of Trickle-down Economics does not apply in these countries because what financial assets do go into these countries usually remain at the top of the social ladder (Diaz). All of this is done to benefit these large companies and exploited countries are left with no economic growth and no ability to catch up with the rest of the developing world. Similarly in the U.S. this is seen in the top one percent of society account for almost half of the countries income (Bernstein 2-4). The extent of poverty and economic inequality in the U.S. and across the globe has not been properly handled or remedied. Corruption of government officials and the political weight that large international businesses use has only widened the economic inequality gap.
While, of course, a few lucky employees are able to enjoy a higher wage, many willing could-be employees are not able to find jobs as a result; in other words, the minimum wage creates unemployment in poorer communities (Rothbard). One sensible person might ask, “Why is the minimum wage still being enforced today even though it is such a horrible law?” This perceptive question leads to a disappointing answer; the people that actively support the minimum wage act because of politics or simply economic ignorance. A minimum wage that derails the less affluent can positively affect those with larger wages and those in power. Therefore, the minimum wage is often used as a scheme for political and personal gain, despite the great amount of hurt that it causes to others (Vuk). In order to avoid unfair political advancements and unemployment to those who need it, the minimum wage should be outright eliminated; the market would work its own way through finding the right price to pay low-level employees.
Poverty rates fluctuate as immigration increases. The United States has taken action to maintain the poverty rates as the economy still lacks stability. Citizens who are considered to be in poverty live in better conditions than many other citizens who are not in poverty. During the 1970’s and 1980’s the economy was almost as bad as The Great Depression. The United States has recovered from many economic problems and has managed to thrive.
The era of volatility has created a shift from America being the middle-class society to simply rich or poor (Sachs, 2011). A gap this large has not been experienced since the 1920’s (Sachs). “The top 1% of households takes almost a quarter of all household income” but an economy this top heavy will not be able to succeed (Sachs, 2011, p. 30). The working classes are struggling with housing, wage, and employment issues. Rich individuals are ignoring these troubles, shipping their business operations out of the country, thus furthering the downward spiral of the economy (Sachs).
The less educated immigrants are usually willing to work for low wages. Since many of them are not US citizens, they are not protected by the US labor laws (Stelzner). Many employers exploit this knowledge (that they are not US citizens) to pay them meager wages. This has the effect of lowering wages since many US citizens are compelled to lower their wage demands to compete with the low wage demands of the immigrants (Stelzner). The result is that employers (the rich) are able to increase their profits and earnings, as the wages employees (poor) plummet due to immigration.
(2006)). As the years went on in our country, inflation increased and the value of the dollar has decreased. Many folks are working average jobs to make ends meet and the cost of goods and services in our country are growing fast but the wages are not. Although income inequality is a huge factor to stature of our economy, according to the National Review article, Liberals identifies income inequality as a major concern, as it leads to more problems such as home loss and not being able to make ends meet. Also as stated in the article, the poor and middle class are quickly falling below the wealthy, wages not increasing or weak jobs.