It is debatable that the best things in life are free, but there is no question that the necessities to live a life in todays society costs money. Having a Job or career is no longer an option as much as it is a requirement to live in the society that is today and to be able to afford the basic needs of an individual such as shelter, food, and clothing. Unemployment rates are on the rise and unemployment is becoming a leading issue in America after the economic recession the country has been facing in recent years.
Because employment is the standard means for earning a salary to fford the basic needs to live, Job cuts have serious repercussions. There are different causes of unemployment, many effects on unemployed individuals and the individual’s family, and numerous statistics that show the rise of unemployment rates as well as the effects on our society as a whole. There are two different types of unemployment: voluntary and involuntary. Voluntary unemployment is the result of an individual’s lack of desire to work or reluctance to lose government aid that is received from filing for unemployment.
The main cause of voluntary employment is welfare payments. When an individual receives welfare payments through eligibility for unemployment, this sometimes actually reduces the individual’s willingness to work. Involuntary unemployment is the result of Job cuts. There are many causes of involuntary unemployment, and many have no solution to be prevented. Inflation is one cause of involuntary unemployment. As prices of production increase, the prices of the goods increase.
For example, because the state of America’s economy is in recession, the price of American-made goods is higher than goods produced in other countries with more stable economies. This causes a drop in American exports because American companies are unable to compete with foreign goods produced in more stable economies at a lesser cost. The American companies face decreased profits, if any profit at all, and are forced to lay-off or fire employees due to insufficient funds to pay for the work of production.
Another cause of involuntary unemployment is the changing and updating of technology. As new technologies arise and companies begin to use the new technology to increase production at a quicker pace or use new computer programming to make office work easier, employees are laid off because heir work has been replaced by the new technology at cheaper costs. In addition to the aforementioned causes of involuntary unemployment, there are many causes that have attributed to the rise in unemployment in the United States from 2007 to present day.
The financial crisis caused by the overabundance of credit cards used has been one factor to the higher than usual unemployment rates in the United States in recent years. The state ofa nation’s economy is determined by the national GDP. The GDP is determined by the total goods purchased in the economy. Credit cards have been the new trend in the past decade for American consumers. The United States consumer population bought a large portion of goods on credit in the past few years. In May 2010, from a report on consumer credit, the Federal Reserve indicated that as of March, $2. 5 trillion worth of consumer debt had accumulated, with a circulation of 576. 4 million credit cards. The large amount of credit is being used by American consumers is unhealthy for the economy and has led toa large volume of debt and bankruptcy from lenders. This has now spread to all areas of the economy, and many companies have had to either file for bankruptcy or resort to large amounts of Job cuts and lay-offs. Another contributor to high unemployment rates in the United States over recent years is the real estate bubble crisis.
Banks and lenders suffered major losses from the severe crisis caused by refinancing, second mortgages, reckless lending and unnecessary price appraisals. Because of defaulted mortgage loans and few buyers in the real estate market, foreclosed properties were selling for less and short sale procedures were costing the banks more money. This was Just an added burden to the banks, and partially contributed to the filing of bankruptcy of many large banks and financial institutions. The first eminent example was the Lehman Brothers filing of bankruptcy, losing $600 billion in assets.
People and businesses associated with the Lehman Brothers suffered considerable losses and sizable amounts of liquidity. Many corporations and companies linked to the bank filed for bankruptcy commencing lay-offs. This crisis is also sometimes referred to as the subprime mortgage crisis of United States. One of the largest industries affected next to the banks and lenders was the automotive industry. Many banks and lenders that offered car and auto loans were hit by the mortgage crisis.
It was harder for people to take out loans to purchase new vehicles, so automotive production decreased and subsequently caused many more lay-offs. International trade, foreign exchange, and oil trade were also affected by the financial crisis and the countrys unstable economy. The diminution of fuel trade caused the inflation of fuel costs, which furthered the decrease in automotive sales. The reduced amount of automotive sales was the cause of many lay-offs not only in the direct automotive companies, but also companies that were associated with the automotive industry.