Government has to pay the unemployed some benefits. The greater the number of the unemployed or the longer they are without work the more money the government has to shell out. The nation not only therefore, has to deal with the lost income and decreased production but also with additional cost. Spending power The spending power of an unemployed person and his/her family decreases drastically and they would rather save than spend their money, which in turn affects the economy adversely. Reduced spending power of the employed Increased taxs and the insecurity about their own work may affect the spending power of the working people as well and they too may start to spend less than before north ayrshire affecting the economy and also the society in a negative manner.
Effect of unemployment on economy Some of the well-known effects of unemployment on the economy are: Unemployment financial costs The government and the nation in many countries the suffer. Government has to pay the unemployed some benefits. The greater the number of the unemployed or the longer they are without work the more money the government has to shell out. The nation not only therefore, has to deal with the lost income and decreased production but also with additional cost. Spending power The spending power of an unemployed person and his/her family decreases drastically and they would rather save than spend their money, which in turn affects the economy adversely.
How Private And Social Costs Of Unemployment Affect Country’s Economy From The Inside Losing a job can lead to a number of serious changes in a person’s life as most people depend on their labour earnings to keep afloat in today’s world. When workers get laid off not only they loose the source of income but also a sense of personal accomplishment. When you don’t have a job your standard of living falls and you feel anxious about your future. Unemployment does not only affect workers singularly but impacts on a country’s standard of living as well. The less workers are kept unemployed in the country the lower the level of GDP of this country becomes.
To be counted as unemployed, someone must be out of work, but still actively looking for work. When someone is unemployed, the government provides monetary assistance which is partly untaxed. A high unemployment rate means that the government has to shell out more money from the budget to support a large number of unemployed people. This creates a heavy burden on the budget and cutbacks in other areas since unemployment assistance is intended to help support the basic necessities. Wealth is drained from the economy for unproductive purposes and economic growth slows down as there are fewer funds for infrastructural development.
Seasonal unemployment occurs when a person is unemployed or their profession is not in demand during a particular season. On the contrary, cyclical unemployment occurs when there is less demand for goods and services in the market so consequently supply needs to be decreased. There are a multitudinous number of both economic and social difficulties associated with unemployment. One fundamental reason why the government particularly stresses on reducing unemployment levels is as a result it poses a great cost on the economy. Not only does it affect the economy, but also it poses a great threat towards the living standards of the unemployed people itself.
It can cause inflation, forcing civilians to limit their lives according to what they have in their pockets making their lives a little bit more difficult. Also raising the minimum wage will cause unemployment because now the owners of different companies have a shorter mortgage and have to make some adjustments in their business which apparently seems to be getting fired some employees. Furthermore, increasing the minimum wage will lower the funds and resources that many companies need to run their business, because now besides of paying more to get the resources they also have to pay their employees more. Indeed raising the minimum wage nationwide will affect our economy, not benefit the
The effect of a surplus drives down an individuals reservation wage, as they are willing to do and take anything for work. Minimum wage only makes this fact more severe, as it increases the supply of workers. Minimum wage increases the cost of doing business, and unfortunately in today's economic conditions employers are not able to pass on the extra costs to the consumer. Minimum wage is not helping workers, it is hurting businesses, and to maintain any profit, and follow legislation companies have to cut labour costs somehow. Companies are being forced to take other alternatives because of higher labour costs for unskilled workers.
Unemployment is far more vital to the economy and plays a huge role in keeping our economic system revolving across the United States. The percentage of unemployed workers in the labor force as a whole distinguishes what the national unemployment represents. Unemployment is predominantly brought to the attention of the public when the economy is in distress and is widely debated between economists trying to dispute their apprehensions. Disconcerting issues consist of those who are unemployed losing wages that support their families, which in turn causes the nation as a whole to lose its contribution to the economy. When the unemployed lose their purchasing power, firms may begin layoffs, causing a cascading effect of catastrophe through the economy.
If we change taxation and unnecessary government spending, we would be able to create more jobs, thus leading to a lower unemployment rating. Employment rates would have a chance of increasing by deficit spending, lowing interest rates and by raising wages. The concept of unemployment affects the society in 2 ways. These ways are in the form of wasting goods and services, and personal insecurity and hardship. In regards to personal insecurity and hardship, as seen in many jobs, especially in small retail stores, employees don’t get compensated much.
Economic downturn almost seems like an inevitable problem; however, I feel it can be helped. If we were not so busy spending millions and millions of dollars on the war each and every day, then we would be able to see that we need to be funding our companies. With so many lay offs recently people are not able to make payments on their homes. The companies had to dismiss the workers because of company downsizing. If our companies were able to be funded in some manner that would allow the business to be able to hire more people; therefore, giving jobless people a place to work and allowing them to make payments on time.