The Heavy toll of Unemployment

The Devastating Effect of Unemployment

unemploymentChronic or any kinds of unemployment does not only affect an individual’s pocketbook, but also their ability to find a job, psychological well-being, and even the entire economy.

A lot of economists have been measuring the costs of unemployment to a person in terms of total income, and the figures have displayed negative numbers. Jobless claims in the year 2010 stood at 205 million, according to the data from International LabourOrganisation. This year, the Bureau of Labor and Labor Statistics estimated that there are more than 216,000 unemployed Americans.

A Repeated Problem

An economy will never benefit from a large number of unemployed people. Corporate companies tend to suffer from less consumer demand because these people have less money to spend with their wants or needs. This often results in businesses to downsize, making the unemployment rate rise again. This cyclical problem is the reason why the government continuously releases stimulus packages.

To make things short, some experts are suggesting that citizens with more money establish a healthier economy.

Financial Costs

It is already given that both the nation and government will suffer from this problem. The government usually pays for the benefits of jobless people, causing them to shell out huge amounts of money whenever unemployment rate rises. The country has to deal with scarcity, loss of income, and other additional costs.

Economic Distress

The high unemployment rate in a country is equal to the lower gross domestic product (GDP) in an economy. People without jobs will have a hard time purchasing goods, making them a huge contributor to lower output and lower spending. Families saving instead of spending their money can also highly influence the economy.

An unhealthy economy will badly hurt the income, quality and cost of healthcare and the standards of living of an individual.

Psychological Effects on the Unemployed

Unemployment always has a mental effect on a person, and the signs can be seen. People who are jobless for more than a month tend to be anxious and depressed. According to the website of Washington and Lee University, prolonged unemployment affects the person’s self-esteem and the damages might still remain even employed.

A sustained high unemployment rate always has its social and economic cost. A person’s lack of ability to work in the market results in several forms of social dysfunctions. Professor of Economics Bill Mitchell said that the government’s willingness and effort to provide jobs can be the answer to overcome high unemployment.