Unemployment the Impact of Unemployment

Unemployment

The Impact of Unemployment on Society

Unemployment is a major social risk all over the globe: losing a job or not being able to find a job is a frightening and threatening situation and the damage goes far beyond the loss of income (Mather, 1998). Unemployment has a proven negative impact on self-esteem and often negatively impacts family and social relationships. In general, being unemployed reduces a person's standard of living both directly and indirectly. Loss of income reduces ones earnings and impairs his or her ability to fully enjoy life and a sense of well-being. Therefore, even with unemployment assistance, individuals and families suffer from unemployment in many ways.

Unemployment describes the condition of a person who is able to work but unable to find employment (Vedder and Gallaway, 1993). Many years ago, unemployment was seen as a voluntary state and was actually punishable by law. However, in modern times, unemployment results from factors beyond the control of the individual worker. Unemployment may be due to layoffs, technological changes in industry, discrimination, lack of skills, or changes in the economy. The term underemployment describes the condition of those who work part-time because full-time jobs cannot be found or who are employed at less-skilled jobs than they are qualified to do.

For unemployed individuals, there are many economic and social consequences (Cotis, 2005). When one is unemployed, many social connections are eliminated. In addition, many jobless Americans suffer from mental stress, financial hardships and low self-esteem as a result of unemployment. For those with families, the burden can be even greater, as health insurance and steady income are necessary to support a family. As a result, poor physical and mental health, increased suicide rates, and high crime rates are a direct result of unemployment.

Economic losses from unemployment are great, since they impact all goods and services that could be produced and used by the unemployed, to income losses for the unemployed household, to consumption and employment losses impacted by reduced demand, to a wide range of physical and mental health diseases.

According to Allegretto and Stettner (2004), long-term unemployment -- when unemployed workers are out of work for six months or more -- is the worst form of joblessness. The results of extended periods of joblessness are major: the long-term unemployed often face financial, personal, and health care problem and then face the loss of their unemployment insurance benefits. An analysis of long-term unemployment from 2000 to 2003 reveals that the number of people without work for six months or more continues to rise, despite improved economic conditions. Job seekers with college degrees and those age 45 and older have the most difficult time finding work, along with criminal offenders and ex-offenders.

In 2002 and 2003, college graduates, workers age 45 and older entered the ranks of the long-term unemployed at alarming rates; however, no industry or demographic group is safe from the effects of the jobless recovery (Allegretto and Stettner, 2004). Many companies have either reorganized production to enable a smaller workforce or made arrangements with foreign companies to outsource jobs previously done by workers in the United States. The high rates of long-term unemployment among skilled and educated workers suggests that no group is safe from the negative impact of this shift in business practices as the labor market responds to the lack of job growth.

Economic theory predicts a cause-and-effect relationship between improvements in the labor market and decreased rates of crime (Bernstein and Houston, 2000). This supports the theory that unemployment and labor market policies play a role in reducing crime rates. For criminal offenders and ex-offenders, it is often difficult to find employment and many are forced to take low-wage jobs. Unfortunately, even when the overall economy is growing strongly, this group faces levels of unemployment and underemployment much greater than that of the overall labor market. This makes earning a living and supporting a family very difficult, causing many offenders and ex-offenders to turn back to crime.

The strong economy of the late 1990s has helped improve the weaknesses in the labor market (Bernstein and Houston, 2000). As unemployment rates dropped, crime rates responded as predicted by economic theory. One recent study revealed that the decline in unemployment resulted in a 30% decrease in crime rates from 1992 to 1997. In addition, a review of unemployment, wages, and crime rates by region shows unemployment and crimes rates falling together.

According to Bernstein and Houston (2000): "As long as crime persists, strong crime prevention measures will be necessary. That is why labor markets, especially low-wage labor markets, can make a difference. To lift the economic prospects of all low-wage workers is not only a worthy economic and social goal; it is one that will pay off in the long run by offering potential criminals a legitimate alternative to crime."

As a result of the U.S. chronic unemployment issue, many people are settling for low-wage jobs (Sarkat, 2005). Despite the criticism that Wal-Mart receives for its low wages and minimal health benefits, the retail company had more than 11,000 applicants in California when it recently opened a new Oakland store. Stephen Levy, an economist for the Center for Continuing Study of the California Economy, said the pent-up demand for work reflects the region's slow recovery from the dot-com crash. "There's still a lot of people who were put out of work in the last four years who still don't have a job," Levy said (Sakrat, 2005).

In 2002, 1.7 million Americans slipped below the poverty line, bringing the total to 34.6 million. Over 13 million of these Americans are children. In fact, the United States has the worst child poverty rate and the worst life expectancy of all the world's developed countries. Approximately 31 million Americans were deemed to be "food insecure," meaning they did not know where their next meal was coming from.

Anxiety, depression, dissatisfaction with life, stress, negative self-esteem, hopelessness regarding the future and other negative emotional states have each been demonstrated in research studies to be higher in unemployed people than in matched groups of employed people (Mather, 1998).