Unemployment has been a crucial issue in the USA in the last couple of years chiefly following the Great Recession. A survey by the United States Bureau of Labor Statistics shows that the unemployment rate has been on the rise. The main result of unemployment is depleted incomes among the citizens as well as a slow economic growth. The economic sectors that experienced the highest part of employment were manufacturing, leisure and hospitality, and health care (Haugen, Susan 34).
Unemployment has its effects on the financial system and the country as a whole. To individual people, unemployment leads to loss of income, which leads to an inclination in the living standard. The spending power of a person also decreases leading to an increase in debts and mortgage repayments. Unemployment causes a negative multiplier effect on the economy of a given country and its neighbors. Normally in the economy, the amount that a person spends acts as an income to another. When a considerable amount of people are losing their jobs at once, the demand for any localized services reduces, and the effect can be passed to the production plants too. A social cost is felt by any increase in unemployment as the citizens become financially deprived (Haugen, Susan 52).
Crime is one of the social effects that will be directly felt as a result of unemployment, and also some social issues including low life expectancy and high divorce rates. If unemployment hails for long on a region, it can lead to equality of wealth.
Other than the economy, unemployment also has an effect on a person’s psychology. Unemployed people are prone to the risk of psychological problems as compared to their employed counterparts. Some of the psychological problems that are caused by unemployment include anxiety, poor self esteem, depression, and psychosomatic symptoms. Psychological problems are also caused by a condition similar to unemployment called underemployment. This occurs when people are working on a part time basis mostly resulting from unemployment. When people find themselves unemployed, they first start looking for a job within the shortest time possible. However, after searching for sometime without success, many people give up, and as a result, suffer psychological problems. Most of the psychological complications caused by unemployment and underemployment are caused by financial frustration (Haugen, Susan 66).
Research shows that the average American is only some weeks away from bankruptcy in case he loses his job today. The government provides some compensation to the unemployed, but it is not enough to sustain them. Unemployment benefits are also issued as part of the government’s efforts to improve the living standard of the unemployment. People, who lack reliable jobs, are forced to consume far less than they normally do. This is because their spending power is limited by their little or no income. Unemployment can also occur due to retirement, and some people who are not able to manage their retirement savings suffer just as much as the rest of the unemployed crowd. If unemployment is prolonged, it can also cause erosion of skills and, as a result, the economy is robbed on talent (Healy 17).
Unemployment has some hidden effects that cannot be calculated mathematically or easily analyzed. Depreciation of talent for the time one is not working is among the effects as well as pessimism among the public on the value of training and education.