Friday, June 5, 2009

Where Will the Unemployment Rate Go?

This is one of the many questions weighing on most Americans' minds, but it might be the most personal and relevant. There are few out there who feel so secure and untouchable in their jobs, salaries and homes that they are virtually unconcerned by The Great Recession.

So where are the jobs, and when will they start to materialize at the necessary rate to lower this ridiculous unemployment rate from its current 9.4% to something much much less?

The answer is not soon enough. The types of jobs that this country was built on: construction, manufacturing, education, and producing/farming have been disappearing at an alarming rate. If the amount of people unemployed today were factored into the size of the workforce in the early 1980s, the unemployment rate in the 1980s would have been 31%.

The 9.4% unemployment rate is a figure that is desensitizing at best, and sobering at worst. There are few people that really understand what the unemployment rate actually shows, and the rate itself is flawed at best.

Yes, it's sobering to hear 9.4% of the country is unemployed, but the usual percentage of unemployment in our country has been, on a stable average, 5.5-6.5% over the past 60 years. To hear that the rate has increased less than 3% during what is being called "the worst financial crisis since The Great Depression" is unimpressive and ineffective. What does work is saying that, on average, there are 8 million Americans unemployed in a 'healthy' economy--a figure that is shocking and should never be considered 'healthy' to the average American, but always seems 'healthy' in the overall scope. Hearing that now there are 14.3 million Americans unemployed is a much better figure to properly showcase how far we have fallen.

A lot of the media would have you believe that very few people, if any, were unemployed before the recession hit, but the truth is the unemployment rate had been at 4.6% before the recession began (which was a large fall from the 7% seen in the late 80s and early 1990s, then again in 1993 and 1994). Now a lot of political pundits would have you believe that this low unemployment rate was proof that the previous administration created plenty of jobs, and was much better suited for the economy than the current administration. False.

The unemployment rate needs to hover around the 5.5-6.5% level in order to maintain a healthy economy. Anything less means that the rate must increase later on as a result--it's a leveling out process, which is what we are now experiencing. The rate will decrease again, I believe, by February 2010 (meaning we will increase from now until then, but we will see at most 9.3% by Feb. 2010.)

The way to boost the employment rate, of course, is to spend more money than you have, which is what the previous administration did--running from surpluses to severe deficits, to manipulating budgets to not reflect costs incurred during wars/conflicts, extra funding spent on materials (weapons, vehicles, etc.) for these wars, and hidden funding for activities that have only come to light since the previous administration vacated (waterboarding, extravagant bonuses, severe deregulation). The commingling of all these factors led to a serious boom akin to the roarin' 20s, and now a serious bust akin to The Great Depression.

Are we due for a repeat?
I think not...we persist in a way of life that is much higher than that of The Great Depression. Instead of sparring a dime, we're sparring some digital cable for our neighbors who longer can afford their HDTVs and their DVRs.

It's easy to say that the cause of this Great Recession is because of too much spending and too much regulation, and its easy to say that the unemployment rate will continue to rise for a while as a result and that this is a catastrophic event of legendary proportions. To say all these things would technically be correct, but the root causes, and the impetuses for this far exceed what is broadcast on the news and are truly interwoven into nearly even company in the US and into the government itself.

The unemployment rate will eventually decrease, but it will cause the graduates from 2007 (present blogger included), 2008, 2009 and 2010 to face a world that is unlike anything that has been seen since the 1930s. A generation has not been lost, but at least four years of college graduates have been lost as a direct result of this recession, which is worse than any other recession.

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