what can be done to solve unemployment problem essay

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Unemployment Problem And Solution (Essay Sample) 2023

Unemployment problem and solution.

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• US & World Economies
• Unemployment

Unemployment Solutions and What's Most Cost-Effective

The Best Way To Solve High Unemployment

Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest.

Monetary Policy

Fiscal policy, the most cost-effective solution, fiscal policy risks, the bottom line, frequently asked questions (faqs).

The solution for unemployment is, of course, to create new jobs. The number of jobs that need to be created depends on the unemployment rate and the number of people entering the labor force in search of work. When unemployment creeps above 6% to 7% and stays there, it means the economy can't create enough new jobs. That's when the government steps in.  

For historical data on U.S. unemployment trends, the Bureau of Labor Statistics publishes the  unemployment rate by year .   It reports the annual percentage of the unemployed in the labor force, as far back as 1949. It also indicates the success or failure of the fiscal and monetary policies through the years, since they affect the rate of unemployment. 

The first solution is  expansionary monetary policy from the Federal Reserve. It's powerful, quick, and effective. Lower interest rates make it easier for families to borrow what they need. That includes expensive items like cars, homes, and consumer electronics. It stimulates enough demand to put the economy back on track. Low-interest rates also allow businesses to borrow for less. That gives them the financial capital to hire enough workers to meet rising demand.  

If the recession is really severe, then monetary policy might not be enough on its own. That's when fiscal policy is needed. The government can either cut taxes or increase spending to stimulate the economy. An expansionary fiscal policy  is slower than monetary policy to get started. It takes time for Congress and the president to agree on the next steps, but it can be more effective once executed. It also provides much-needed confidence that the government will turn things around. Confidence is crucial for convincing people to spend now for a better future.

Cutting taxes works like lowering interest rates. Both give businesses and consumers more money to spend. That increases demand. It gives businesses more cash to invest and hire more workers. 

Government spending can also take the form of jobs programs. The government can hire employees directly. It also contracts with companies to build things and provide services. It provides consumers with the cash they need to buy more products.

Dollar for dollar, what's the best investment that creates the most jobs? A University of Massachusetts Amherst study found that  building mass transit  is the most cost-effective solution. One billion dollars spent on public transportation creates 19,795 construction jobs.

Unemployment benefits can provide growth as well. According to Wayne Vroman, an economist and senior fellow at the Urban Institute for the Department of Labor, unemployment insurance led to the creation of 1.6 million jobs on average each quarter from 2008 to 2010. The unemployed are most likely to spend every dime they get. They buy basics like groceries, clothing, and housing. As a result, every dollar spent on unemployment benefits stimulates $1.64 in gross domestic product.

How can $1 create $1.64? It does it through the ripple effect. For example, a dollar spent at the grocery store pays for the food. It also helps pay the clerk's salary, the truckers who haul the food, and even the farmers who grow it. The clerks, truckers, and farmers then buy groceries. This ripple effect keeps demand strong, creating added benefits. Stores keep their employees to supply the goods and services the unemployed need. Without these benefits, demand would drop. Then retailers would need to lay off their workers, increasing unemployment rates. 

Unemployment benefits work fast. The government writes a check that goes directly into the economy. Public works projects take longer to get implemented. The plans must be updated, workers hired, and supplies delivered. 

Funding education is also an effective unemployment solution. One billion dollars spent hiring teachers adds $1.3 billion to the economy. Better-educated people can get higher-paying jobs. They can buy more things with the higher wages they earn. Each $1 billion spent can create 17,687 jobs. That's much better than defense spending . It only creates 8,555 jobs for the same investment. Defense is more capital-intensive. Modern defense relies more on drones, F-35s, and aircraft carriers than soldiers.

The most popular fiscal stimulus is across-the-board  income tax cuts . That's not the most cost-effective, according to the UMass/Amherst study. One billion dollars in cuts creates 10,779 jobs. Workers only spend half the money, which in this case is only $505 million. 

As a result, reductions in the tax rate are not the most effective way to help job growth. Most people don't realize they are getting a break until tax time. The tax cut means they pay less in taxes, but they still have to pay. Psychologically, they are less likely to spend anything extra. It just doesn't feel like a bonus. As a result, people are more liable to save anything they get or use it to pay down other debts.  

A more effective tax cut is in businesses' payroll taxes. The best place to give business tax relief is with small businesses. From 2000 to 2018, they produced 65% of all net new jobs created.  

The downside of fiscal policy is that it could add to the budget deficit. That creates more government debt. As debt approaches 100% of the economy's total output, it slows economic growth. Investors could lose the desire for that government's debt. This makes interest rates rise, increasing the cost of borrowing.

Advocates of  supply-side economics  say that, over time, tax cuts boost the economy enough to replace any lost tax revenue, but according to the Laffer Curve, that's only true if taxes are over a certain threshold to start with.  

The government uses two policies to tackle unemployment: monetary and fiscal.

Expansionary monetary policy increases the money supply and:

• Has more immediate effects
• Stimulates demand, production; and ultimately, employment
• Is managed by the Federal Reserve or a central bank

Expansionary fiscal policies include government spending and tax cuts. These:

• Take more time to have an impact
• Have a greater impact on consumerism, so they are more effective as economic stimuli
• Increase government debt and add to the budget deficit

The most cost-effective solutions are fiscal. Building mass transit, granting unemployment benefits, funding the educational sector, and payroll tax cuts allow consumers to gain more income which they spend to spur demand.  

How does a high unemployment rate affect the economy?

High unemployment can have detrimental effects throughout the economy. When fewer workers are working, it reduces production and GDP. Unemployed workers drain resources from state and federal governments while tax revenues are simultaneously cut. Persistent unemployment can have serious societal effects, as well. A study conducted during the Great Recession showed how extended unemployment can hurt workers' long-term earning potential, which can affect the economy for years to come.

What is the natural rate of unemployment?

The natural rate of employment is an estimate of how low unemployment would go when inflation is stable and economic production is steady. It's difficult to estimate with precision, but economists suggest that it usually hovers around 4.5% to 5.5%. In other words, when the economy is stable and growing neither too quickly nor too slowly, natural unemployment will usually fall somewhere within that range.

Stanford University. " Why Has the Unemployment Rate Fared Better Than GDP Growth? "

U.S. Bureau of Labor Statistics. " Labor Force Statistics From the Current Population Survey ."

Board of Governors of the Federal Reserve. " How Does Monetary Policy Influence Inflation and Employment? "

International Monetary Fund. " Fiscal Policy: Giving and Taking Away ."

National Archives. " Estimates of Job Creation From the American Recovery and Reinvestment Act of 2009 ."

Carnegie Mellon University. " The American Recovery and Reinvestment Act: Solely a Government Jobs Program? "

University of Massachusetts Amherst. " The U.S. Employment Effects of Military and Domestic Spending Priorities ," Page 6.

Center for American Progress. " Unemployment Insurance Dollars Create Millions of Jobs ."

Economy.com. " Washington Throws the Economy a Rope ."

Congressional Budget Office. " Economic Stimulus: Evaluating Proposed Changes in Tax Policy ," Page 5.

Congressional Budget Office. " The Fiscal Multiplier and Economic Policy Analysis in the United States ," Page 5.

U.S. Small Business Administration. " Frequently Asked Questions ," Page 1.

Bank for International Settlements. " The Real Effects of Debt ," Page 1.

University of California, Berkeley. " How Far Are We From the Slippery Slope? The Laffer Curve Revisited ."

Economic Policy Institute. " Sustained, High Joblessness Causes Lasting Damage to Wages, Benefits, Income, and Wealth ."

Federal Reserve Bank of San Francisco. " The Natural Rate of Unemployment over the Past 100 Years ."

• 7 Causes of Unemployment 2 of 16

Twelve Ways to Fix the Youth Unemployment Crisis

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Elisabeth jacobs elisabeth jacobs senior fellow - center on labor, human services, and population at the urban institute, former brookings expert.

May 22, 2014

The Great Recession was particularly devastating for America’s young workers. Nearly 6 million 16- to 24-year-olds neither have jobs nor are pursuing a degree. This disconnect can have a “scarring effect,” which can negatively impact their long-term employment prospects and lifetime earnings.  In her new paper Elisabeth Jacobs analyzes the crisis of youth unemployment and America’s sprawling workforce development system.  She makes recommendations for how to improve America’s higher education systems, apprenticeship programs, paid volunteering programs, primary and secondary education, and tax policy.

In order to address the youth unemployment crisis, policymakers should consider the following proposals:

1.     Fully fund community colleges

2.     Expand and revise the Registered Apprenticeships program at the Department of Labor

3.     Establish Career Internship Standards

4.     Expand the Earned Income Tax Credit (EITC) to younger workers.

5.     Increase the size of the AmeriCorps

6.     Appropriate funds for the Youth Opportunity (YOG) Program

7.     Overhaul school dropout prevention policies by offering them programs that lead to employment

8.     Fully fund and reform Career and Technical Education (CTE) programs in high schools

9.     Expand current mentoring programs

10.  Create incentives for public private partnerships to benefit young unemployed people

11.  Seek input from the private sector

12.  Renew the financial commitment to current programs that reconnect young adults to education and employment opportunities.

Governance Studies

John Villasenor

September 24, 2024

Adam Looney, Constantine Yannelis

September 17, 2024

Phillip Levine

September 3, 2024

Essays About Unemployment: Top 6 Examples and 5 Prompts

Read our guide to see helpful essay examples and prompts to further your understanding and write essays about unemployment.

Unemployment is an unfortunate circumstance many find themselves in; it is a challenge that civilized society faces today. When people are unemployed, they look for jobs but cannot get them. As a result, they are left without a source of income and cannot adequately provide for themselves and their families. This, in turn, can lead to various issues, including depression.

Unemployment is a social, economic, and political issue. It leaves many people in poverty and prevents people from obtaining a source of income. As a result, politicians capture the eyes of voters by promising to lower the unemployment rate to get elected. 

You can get started by reading these essay examples if you are writing essays about unemployment.

6 Examples of Essays About Unemployment

1. unemployment reflection by christopher haynes, 2. what i learned from nearly a year of unemployment by becca slaughter, 3. why aren’t europe and canada in the same boat as u.s. for unemployment by glen hendrix, 4. a global dilemma: how unemployment creates poverty by tess hinteregger, 5. why has covid-19 been especially harmful for working women by nicole bateman and martha ross, 6. youth day and ordeal of nigerian youth by utomi jerome-mario, essay prompts about unemployment, 1. unemployment during the covid-19 pandemic, 2. the connection between unemployment and crime, 3. unemployment: whose fault is it, 4. the causes of unemployment, 5. the effects of unemployment.

“In order to secure work, we must be prepared to change or upgrade our skills and be willing to relocate if necessary. But some people are not interested in retraining to find work in another field, some people do not have the confidence to go out and look for work, and some refuse to accept a job they feel is below their level. Unless people like this change their attitudes, they will not be able to find work.”

Haynes provides two perspectives on unemployment; first, that the government should do more to address it, and second, that if people want work, they must adjust to make a living. He believes that many are unemployed because they are unwilling to change their skillset or relocate to get a job. Therefore, more should be done to reduce unemployment, but it goes both ways; everyone must put in the effort.  

“I remember feeling embarrassed and powerless. I was angry it wasn’t my decision. I was happy I didn’t have to go back there, yet I was stressed about not having anywhere to go. Ultimately, I felt an overwhelming sadness that left me terrified. While I was overflowing with confusing and contradicting emotions, I somehow felt empty.”

In her essay, Slaughter reflects on her unemployed time and how it changed her. Her previous job was long and stressful, but whenever someone would ask her what she did for a living, she was embarrassed and regretful for not being there anymore. In addition to losing her job, she feels like she lost a part of herself at that time. Thankfully, she got a new job, one less taxing than her previous one. 

“You would think paying all that money year after year to a government whose purpose is to “establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity” would entitle that person to a modicum of “blessings” to insure his “tranquility” and “general welfare” in case of some stupid virus pandemic. It would certainly be the “just” thing to do. And that person’s “posterity” might look a bit less bleak. European governments and Canada did just that. And it’s not even explicitly stated in the preamble to their constitution.”

Hendrix criticizes the United States’ response to the unemployment problem caused by the COVID-19 pandemic, saying that Canada and European nations have done a much better job. He discusses how much better their unemployment benefit system is compared to the U.S. and how it is ironic that the United States, whose constitution says all of these things promoting justice and wellbeing, cannot provide that for its citizens during a global pandemic. 

“While unemployment can create poverty, poverty also reduces the chance of being employed. To ensure that those who are affected by unemployment do not fall into the negative cycle, researchers believe that governments should focus on improving quality education and training all young people so they remain in school.”

Hinteregger, in her essay, explains the link between unemployment and poverty, writing that it leads to the loss of income. People will also have to raise their families in poverty, which perpetuates the cycle of poverty. In addition, the poor may resort to violence to make a living. She points out the sheer irony of this issue, as unemployment causes poverty while poverty may also reduce the chance of being employed. 

“COVID-19 is hard on women because the U.S. economy is hard on women, and this virus excels at taking existing tensions and ratcheting them up. Millions of women were already supporting themselves and their families on meager wages before coronavirus-mitigation lockdowns sent unemployment rates skyrocketing and millions of jobs disappeared. And working mothers were already shouldering the majority of family caregiving responsibilities in the face of a childcare system that is wholly inadequate for a society in which most parents work outside the home.”

Bateman and Ross write about the effects of the COVID-19 pandemic on women. Many women are forced to go through so much to provide for their families; however, the lockdowns led to many of them losing their jobs. The unemployment rate for women rose dramatically, by 12 percent, from February to April of 2020. It has been difficult for them to balance work with taking care of their families, women’s primary role as dictated by society. 

“Youth unemployment is potentially dangerous as it sends a signal to all segments of the Nigerian Society. Here in Nigeria, the rate of youth unemployment is high, even at the period of economic normalcy i.e. the oil boom of the 1970s (6.2 per cent); 1980s (9.8 per cent) and the 1990s (11.5 per cent). Youth unemployment therefore is not a recent phenomenon. But if what happened in the 1980s/90s were a challenge of sorts, what is happening presently, going by the latest report by the National Bureau of Statistics (NBS), is a challenge.”

Jerome-Mario’s essay focuses on several issues affecting the Nigerian youth, including unemployment. The country has a high unemployment rate; over a fourth of the youth population is unemployed. He stresses the importance of the youth using their voice to make a change and to persuade the government to care for its citizens more. 

The pandemic and its lockdown policies have undoubtedly caused many people to lose jobs. Look into the impact of COVID-19 on the unemployment rate, particularly during the early months of the pandemic. Which sectors were most affected? Pull data and statistics to show how the public was affected by the covid-19 pandemic in terms of unemployment.

Many say that unemployment leads to higher crime rates. Do you believe this is true? Research how unemployment is linked to crime; examine the effects of unemployment on mental health; and conclude whether this may contribute to the increased likelihood of committing a crime. 

In Haynes’ essay, he claims that employers/the government, and workers are to blame for unemployment. After reading his essay and both arguments, who do you believe is at fault? Explain your response in detail, and make sure to provide a solid base of evidence.

Unemployment has many contributing causes. Assuming a non-pandemic setting, research what causes unemployment and list them down in your essay. Elaborate on each one and, if you can draw connections, explain them as well. 

As a grave issue, unemployment has many severe effects, notably poverty. For your essay, write about the effects of unemployment on a person, both physical and mental. How are they connected? What secondary effects might they produce? For a compelling and argumentative essay, answer these questions using research material and interview data.

For help with this topic, read our guide explaining what is persuasive writing ?If you are interested in learning more, check out our essay writing tips !

Home / Essay Samples / Government / Unemployment / Solving Unemployment: Causes and Effective Solutions

Solving Unemployment: Causes and Effective Solutions

• Category: Business , Government
• Topic: Employee Engagement , Employee Retention , Unemployment

Pages: 2 (698 words)

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Introduction

Reference list.

• GroundUp. (2019). Why is South Africa’s unemployment rate so high? 
• Kingdom Ghandi, G. Knight, J. (2001). Unemployment in South Africa: the nature of the beast. Department of Economics. University of Oxford. 

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