Unemployment in California
As a result of the current increase in the unemployment rate in California, this paper will discuss an article by Semuels (2011) on “California unemployment rate hits 12.1% as employers slash jobs” posted on the Los Angeles Times on September 17, 2011.
Introduction
On August this year, California’s employers slashed some jobs resulting to an increase in the unemployment rate by 0.1% to 12.1%; the job loss was due to uncertainty arising from the economy recovery leading to reduction of payrolls by 8,400 (Semuels, 2011). The increase in unemployment rate has raised some signs of worries in the labor market in California, but the situation is turning around since this year alone the California’s jobs increased by 98,500 (Semuels, 2011).
The unemployment rate increased due to various reasons such as uncertainty arising from the slow growth in the economy, current slide in the stock market and the debt crisis from the European region, which spooked the employers; as a result employment was delayed awaiting the restoration of the market confidence.
The unemployment was also triggered by differences in Washington on how to sustain the economy; this was evident as state and local agencies cut positions in order to reduce costs and in the process 3,600 positions were lost by the government in California (Semuels, 2011).
In the USA, Nevada has the highest unemployment rate followed by California and the chronic unemployment has affected many families in California because the families’ income is currently less than federal’s poverty level of 16.3%, an increase of 1% compared to year 2010.
Therefore, approximately 2.2 million young people in California live in such families where children have a higher chance of not going to college compared to children from richer families. These less fortunate families are likely to have poor health and they may also engage in illegal activities (Semuels, 2011).
In order to reduce the unemployment Obama sanctioned work-sharing plan that was implemented in Europe in the attempts to avoid layoffs by distributing the pain amongst the co-workers, and also contentious bridge-to-work plan, which will provide temporary work or training to individuals relying on unemployment benefits thus putting them on a pathway to regular jobs (Semuels, 2011).
Obama also suggested part of the stimulus bill worth $447,000 million be used as tax credit of $4,000 employers. The Obama’s main objective was to rescue individuals relying on funds from unemployment insurance considering the real economic situations given that about 6 million employees in the US (approximately 43%) of unemployed individuals have so far survived without work for at least six months (Bureau of Labor Statistics, 2011; Lee and Puzzanghera, 2011).
As a result many employees have been discouraged and have withdrawn from the labor market altogether; if they remain unemployed for a long time this will mean that they will suffer the results of permanent unemployment which would drastically cut their income levels.
This is a severe problem in US since it implies that the country will be less productive making it harder for the nation to make payments to Medicare, infrastructures and defense that affects everybody. Therefore, it is completely evident that the huge amount of resources pumped towards alleviating unemployment is a massive waste (Lee and Puzzanghera, 2011).
In conclusion, the US must spend money in capital investments so as to create more jobs for its people thus reducing the rate of unemployment and hence increasing productivity which will eventually increase services and goods available for consumption thereby enabling investments and exports.
References
Bureau of Labor Statistics (2011). Regional and State employment and unemployment – August 2011. Retrieved from https://www.bls.gov/news.release/pdf/laus.pdf
Lee, D. and Puzzanghera, J. (2011, September 9). Obama suggests changing unemployment system. Los Angeles Times, p.1. Retrieved from https://www.latimes.com/
Semuels, A. (2011, September 17). California unemployment rate hits 12.1% as employers slash jobs. Los Angeles Times, p.1. Retrieved from https://www.latimes.com/business/la-xpm-2011-sep-17-la-fi-california-jobs-20110917-story.html