Unemployment is one of the principal macroeconomic problems facing the United States economy. This implies that the economy is not operating under full employment. United States has been experiencing a high level of unemployment in the past. However, in the recent past the United States unemployment has fallen down to 7. 7 percent as per statistics this year in the month of November. This is the lowest unemployment rate United States labor department has recorded in the past four years. According to a report by the labor department, about 146000 jobs were added in the economy.
This resulted to the unemployment rate falling from 7. 8 to 7. 7 percent. The fall is largely attributed to the fact that most households stopped looking for employment opportunities in the economy (Zhang, 1). Unemployment in an economy is an indicator that the economy is not operating under full employment. Unemployment is a situation where individuals who are eligible and willing to work cannot get work in the economy. There are several types of unemployment in the US economy. They include voluntary unemployment where individuals voluntarily decide not to take any employment opportunity in the economy.
Seasonal unemployment also arise where household are often in and out of employment because of the seasonal changes in the work. Cyclical unemployment also arises because of the changes in business cycles. During booms, most of the labor force is in employment, and during recession, there are high levels of unemployment in the economy. Frictional unemployment arises where the household take time when they leave one job and before getting another job. This transition period from one job to the other is referred as the frictional unemployment.
Structural unemployment is also evident in the economy where the skills of t he households fails to match the needs of the industries in the economy (Zhang, 1). A high level of unemployment has several implications on the United States economy. These implications include high government spending in the economy because the government has to provide the population with basic needs such as education and services such as Medicaid. It also results to the government providing high amounts of unemployment benefits in the economy.
Unemployment in the economy also results to low levels of gross domestic product, which moves the US economy way from efficient allocation of resources(Zhang, 1) . About 70% of the United States output is used for the unemployed workers and personal consumption. Firms in the economy are forced to pay a price for unemployment in the economy. The unemployment benefits that the economy incurs are financed by revenue solicited from taxes on firms and businesses. The firms are also faced with a challenge of low demand for their output in the economy. Recruiting and hiring employees in the firms is also an expensive.
From the analysis, it is clear that a fall in the level of the unemployment rate in the economy is significant. It shows that the economy is growing and moving towards full employment. Thus, there is efficient allocation and use of resources in an economy. It also implies that the economy is expanding hence it is able to create employment opportunities. US economy should seek to expand their industries and provide the households with employment opportunities.
Zhang, Zhang. US Unemployment Drops to Four-year Low. 2012. Web. 8 Dec. 2012.