Running Head: Unemployment
Unemployment is the situation where people have been actively looking for a job, are
available to work and have not been able to secure the job. There are different types of
unemployment: frictional, seasonal, cyclical, and structural. The unemployment rate in the
United States is at 3.7% as at September 2018(Fortune Magazine).
Unemployment in the US
The labor ministry announces the rate of unemployment every month, a percentage of
unemployed people over the number of workforce in the country. The unemployment in the
country dipped to 3.7% in the month of September, lowest in 50 years. The rate shows that
hypothetically everyone who needed a job got one except for the frictional unemployment
(Fortune Magazine). It is clear the government is working on reducing the number of people who
are unemployed in the country. The manufacturing sector in the country for the past one year
accounted for more than two hundred thousand jobs in the economy which reduced significantly
the number of people who are unemployed.
Despite lower unemployment rates, the wages of the existing workers have not been
increasing. This is an indication that the economy is creating more jobs while keeping the wages
of the employees constant. This is attributed to an economy which is still growing. According to
the Fortune Magazine, the labor ministry predicts even a lower rate at 3.3% in the last months of
the year. The recent US trends show that after a low rate of unemployment, the country enters
into a recession period. This a challenge of the low unemployment rate in the country which is
been addressed according to the labor ministry officials.
Since unemployment considers the number of people willing and available to work, the
millions of people who are at home and are not actively looking for a job are not counted in the
calculations of the unemployment rate.
Unemployment has been a problem in the whole world and has been addressed by the US
government through various policies in trade, manufacturing, exports, imports and private sector
which all create job opportunities. However, due to the ever-increasing population, to match jobs
and unemployment has been a challenge for the country hence the unemployment.
In my opinion, the country is doing the best to reduce the unemployment rate. By doing
so, the dependency ratio reduces, and the economy of the country grows significantly.
Fortune magazine. http://fortune.com/2018/10/19/us-unemployment-rate-2018/
Government expenditure and taxation
Taxation on goods and services is the main source of income for the US government.
Taxes range from a progressive tax, tariffs on imports, regressive and proportional taxes. Taxes
levied on goods and services increase the prices of goods and services. Tariffs are made to
protect the goods produced in a country from external competition. Increased government
spending or taxation has effects on the economy. Government debt also affects government
spending. Interest expense and repayment increase the spending of the country.
The relationship between government spending, taxes, and debt
Government debt can be classified as future spending used currently. The government
borrows to meet the expenditure on its projects whenever there is a deficit in the budget of the
country. Due to the rising interest expenses, the government can be forced to spend more on
interest than other national programs. In the current budget, the government spends more on the
interest than defense and medical care.
The current government debt is increasing fast due to the high budget deficit, reduced
taxes, and higher interest rates. Higher interest rates increase outgo money, which would be less
than incoming money. Government projects, therefore, reduce due to more money going to
repayments and interest expenses.
The effects of increased interest expenses are increased taxes and tariffs. If the
government does not increase taxes for repayments, the deficit of the budget will increase and
the borrowing chain increases. Increased taxes increase the cost of living for the citizens in the
The government has policies that guide both taxation and government spending. The
policies can either be expansionary or contraction policies. The expansionary grows the economy
and employment opportunities. They involve high government spending and lower taxes while
contraction policies reduce the growth of the economy. They involve a decrease in government
spending and higher taxes. Both policies have effects on the economy of the country.
New York Times. https://www.nytimes.com/2018/09/25/business/economy/usgovernment-debt-interest.html
Running Head: Federal Reserve’s