Unemployment is a serious issue that causes negative effects both for people and for the country and its economy. For instance, job search, minimum-wage laws, unions, and efficiency wages can all explain and contribute to why some workers do not have jobs. (Mankiw, 2012) Among the mentioned causes, some definitely negative impacts of unemployment are financial costs for the government and poverty. Proverbs 21:5 New Living Translation (NLT) states, “Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty.”
The first negative impact of unemployment is additional financial costs for the government. The higher unemployment rate in a country is, the bigger then unemployment compensations costs, lost tax revenue, service and social costs are. For example, according to a Congressional Budget Office an American government spent in 2012 around 520 billion dollars on unemployment compensation, which is quite high and might lead to worsening of an economic situation in general.
The second negative impact of this social issue is poverty. It is logical that poverty is a cause of unemployment because if people do not have jobs, they do not have a proper income and, as a result, cannot satisfy their primary needs. Therefore, when unemployment rate in increasing, the number of poor people start increasing as well. Thus, it is not surprise that the greatest number of people at risk of poverty in Europe are in those countries, where unemployment rate is also the highest. There countries are: Greece, Romania, Bulgaria and Spain. In all these countries the poverty rate is 20% and higher. As opposite, those European countries that have not so many unemployed people, have quite low poverty rate: Czech Republic, Finland and Netherlands. In the United States, there is also a link between unemployment and poverty rates. Thus, the lowest percentage of people living below the poverty line was registered in the USA in 2000 – it was around 11%. However, because if the financial crisis started in 2008, poverty rate started increasing caused by the massive loss of jobs of population, and in 2009 there was indicated the highest poverty rate in the US since 1993 – more than 15%. Moreover, though the situation is better nowadays, the amount of people in poverty is still high – around 13%, and, according to the predictions of economists, it is not going to drop soon. As it was mentioned in the previous chapter, in terms of ethnic groups, the biggest percentage of unemployed people is among African Americans and Hispanic, while the number of unemployed Caucasians and Asians is much lower. It is similar for the poverty rate as well: most poor inhabitants in the US are African Americans – 26.2%. Hispanic population is on the second place – 23.6%. In terms of Caucasians and Asians, the percentage is twice lower – 10.2% and 10.1%. This statistics leads to a conclusion, that there is an obvious connection between poverty and unemployment in the United States. (Poverty rate in the United States) Public Policy and Unemployment Insurance In many cases the government does put forward effort to help the economy recover. The government markets numerous programs to support the unemployed. Sometimes the works for the better and sometimes it does not. Those programs are often through government operated agencies, public training facilities and programs, and even educational institutions. Unfortunately, some individuals feel they are forgotten about or overlooked by the world which leads to depressed, disappointed, and discouraged individuals. Critics of these programs question whether the government should get involved with the process of …show more content…
First of all, it leads to increase of government financial costs such as unemployment benefits, for example, because the more people are unemployed, the more money government will have to pay in order to support these people. Another negative impact is poverty. As it was proved already in this research paper, the concepts of unemployment and poverty are interrelate, which is quite logical: when people lose their jobs and become unemployed, they do not have enough money, and their expenses start exceeding their incomes, which leads to poverty. The idea is not to make a living from unemployment advantages but take advantage of the opportunities provided by the government to better the
The first negative impact of unemployment is additional financial costs for the government. The higher unemployment rate in a country is, the bigger then unemployment compensations costs, lost tax revenue, service and social costs are. For example, according to a Congressional Budget Office an American government spent in 2012 around 520 billion dollars on unemployment compensation, which is quite high and might lead to worsening of an economic situation in general.
The second negative impact of this social issue is poverty. It is logical that poverty is a cause of unemployment because if people do not have jobs, they do not have a proper income and, as a result, cannot satisfy their primary needs. Therefore, when unemployment rate in increasing, the number of poor people start increasing as well. Thus, it is not surprise that the greatest number of people at risk of poverty in Europe are in those countries, where unemployment rate is also the highest. There countries are: Greece, Romania, Bulgaria and Spain. In all these countries the poverty rate is 20% and higher. As opposite, those European countries that have not so many unemployed people, have quite low poverty rate: Czech Republic, Finland and Netherlands. In the United States, there is also a link between unemployment and poverty rates. Thus, the lowest percentage of people living below the poverty line was registered in the USA in 2000 – it was around 11%. However, because if the financial crisis started in 2008, poverty rate started increasing caused by the massive loss of jobs of population, and in 2009 there was indicated the highest poverty rate in the US since 1993 – more than 15%. Moreover, though the situation is better nowadays, the amount of people in poverty is still high – around 13%, and, according to the predictions of economists, it is not going to drop soon. As it was mentioned in the previous chapter, in terms of ethnic groups, the biggest percentage of unemployed people is among African Americans and Hispanic, while the number of unemployed Caucasians and Asians is much lower. It is similar for the poverty rate as well: most poor inhabitants in the US are African Americans – 26.2%. Hispanic population is on the second place – 23.6%. In terms of Caucasians and Asians, the percentage is twice lower – 10.2% and 10.1%. This statistics leads to a conclusion, that there is an obvious connection between poverty and unemployment in the United States. (Poverty rate in the United States) Public Policy and Unemployment Insurance In many cases the government does put forward effort to help the economy recover. The government markets numerous programs to support the unemployed. Sometimes the works for the better and sometimes it does not. Those programs are often through government operated agencies, public training facilities and programs, and even educational institutions. Unfortunately, some individuals feel they are forgotten about or overlooked by the world which leads to depressed, disappointed, and discouraged individuals. Critics of these programs question whether the government should get involved with the process of …show more content…
First of all, it leads to increase of government financial costs such as unemployment benefits, for example, because the more people are unemployed, the more money government will have to pay in order to support these people. Another negative impact is poverty. As it was proved already in this research paper, the concepts of unemployment and poverty are interrelate, which is quite logical: when people lose their jobs and become unemployed, they do not have enough money, and their expenses start exceeding their incomes, which leads to poverty. The idea is not to make a living from unemployment advantages but take advantage of the opportunities provided by the government to better the