FileUnemployment

Why Reducing Unemployment Rate Is Not Enough

Updated : May 13th, 2019

Why_Reducing_Unemployment_Rate_Is_Not_Enough

The rate of unemployment in the United States reached a record low by the end of April, which is said to have the lowest rate of unemployment in the last 50 years. The unemployment rate dropped to 3.6%, and the month of April will be the 14th consecutive month to record an unemployment rate below 4 percent. While the drop in the rate of unemployment appears to be a good sign for the economy on the outset, this statistic alone does not show the entire picture.

The Employment Situation Report for the month of April suggested that the US economy added no less than 263,000 jobs in the month of April. Along with the decline in the rate of unemployment, the United States economy has also witnessed another highly encouraging development.

The wage growth in the last nine continuous months has been over 3%, with the month of April recording a rise in the wage rate by 3.2%. The United States economy has witnessed the wage rate growth in such continuity for the first time since the great recession of 2008-09.

As the United States enter into a positive time-period with respect to the growth of employment rate, the government still have a major concern to address. The concern being, the 3.6% unemployment rate does not completely encapsulate the actual state of the matters on the grassroots level.

The official unemployment rate only includes those in the ‘labor force’. To remain in the labor force, the requirement is that one must have looked for an employment opportunity in the last four weeks.

The real unemployment rate, as opposed to the official unemployment rate, also includes the underemployed, the marginally attached, and discouraged workers. As a result, the real employment rate is considered to be more comprehensive as it represents a larger set of people who are at the bottom of the labor market.

The rate of real unemployment in the US is 7.3% for the month of April. Also, the reduction in the main unemployment rate is coincided with a decline in the labor force participation by 0.2 percentage point, which currently stands at 62.8%.

The records show that the share of people working or actively looking for work has seen a bare minimum change in the last seven years. This shows that aspects such as job mobility, combined with mediocre wage rate growth is not helping the employees grow in reality.

To counter this and provide a more organic environment for the employees and the employers, the government must come up with a comprehensive job creation strategy. The government must also cater to those who are not in the ‘labor force’, along with those who are currently seeking a job to see more sustainable growth in the economy of the United States.

The United States already gives importance to the start-ups to make sure that more and more people get opportunities. Start-ups are also said to produce a large number of jobs due to the sheer number of new ventures that come out every year. The successive governments over the years have spent a lot of amount of money to provide an organic infrastructure to help start-ups to prosper.

The issue here is that, in spite of the investment and support, nearly 75% of the start-ups fail in the early years. Also, Startups that have less than 20 employees generally have a negligible effect on net job creation until they pass the 5-year period.  

The government must diversify its policy programs beyond the start-ups, which is currently given high importance with respect to job creation. Sectors such as manufacturing, construction, and health care have been steadily increasing the intake of people. Governments providing incentives to these industries to create more jobs will help in creating more stable jobs. This may help in bringing down the number of underemployed and marginally attached workers.

There is a need for the government of the US to diversify its purview beyond the start-ups and look to provide incentives for high-impact companies that are locally based to accelerate the next level of growth.

  1. I was permanently severanced from my job due to a Co. Reorg & received my last severance pay last week. I called UE & was told that I should now do my application online since I will no longer be getting funds & still without a job & that this coming Sunday regardless of knowing if I will or will not get benefits yet that I should still file a weekly claim in case of UE back pay.
    So my question is, do I still have to report 4 jobs applied to within this week, even if I do not know if I will be approved/denied for benefits until possibly next week anyway?

    1. Lynda,

      You should continue to report the job applications as long as you’ve been asked to do so. There will be a “Waiting Period” and the first payment will take about 7-10 days after which they’ll flow much quicker. Please call the Claims Center for clarification.

  2. I tried to transfer from one state to another. When I left Montana I was told there would be no problem transferring. When I arrived in North Carolina I had trouble reaching the area manager by phone. When he finally called me back he said to meet him for lunch to discuss when and where I would be working. He did not show up for lunch. Then he never returned any of my calls. I went PA to visit a friend a few weeks later and tried there. I met with the hiring manager and was told there should not be a problem doing the transfer since I was still in the system. I called the store a few times and they said it was still pending. Then I was terminated without even a phone call. Am I eligible for unemployment and if so do I file in Montana or North Carolina. I still have a Montana drivers license but I am living in NC.

    1. Stacey,

      As long as you were unemployed involuntarily, you should be able to claim UI benefits. Please consider applying.

  3. I have worked for 32+ years and recently have become unable to work due to health reasons, so I have had to resign from my job. I have contacted SS and will be able to apply for disability but it will take awhile to process. Can I apply for unemployment benefits? I live in WV.

    1. Sandra,

      UI benefits are only extended to claimants who lose their employment due to involuntary reasons. Please reach out to the Unemployment Office for more.

  4. I had to quit my job at Walmart in Fairmont West Virginia and moved back to my home state ky, I’ve got a son with drug problems and 3 older sisters that are not doing so well in health cause of their age. I didn’t understand about the transfer part they had at Walmart that I could put a date when I could start back because of my car problems I thought when I left I had to go in like in s few days, I’ve applied here at Walmart in Winchester ky 40391 two times already plus dollar store, speedway, truck stop, bp, a few other places it’s been going on 7 months without a job I live with my son and its getting harder on him paying rent and utilities and food, not to mention our personal hygiene stuff I really need help I have no income coming in to help him and his wife out I get foodstamps and Medicaid I was praying I could qualify for unemployment PLEASE HELP!!!

    1. Vicky,

      I can understand your situation. Unfortunately, UI benefits are only extended to claimants who lose employment due to involuntary reasons. Please call the Unemployment Office for further clarification.

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