UNEMPLOYMENT IN EE.UU.

Published by "Los Tiempos" Newspaper, Julio 2012

One of the most important features that stand out in a down economy is a high rate of unemployment.

 

In recent months the rate has averaged 8.2% in the United States. However, for those aged between 20 and 24 years, that rate increases to 13.3%, which could be interpreted as an inability of the economy to absorb the young workforce recently joined the labor market. Obviously, if this trend continues, it could exacerbate unemployment in this segment which contrasts with ages between 45 and 54 years where unemployment is only 6.2%. From a demographic standpoint, this sector "aged" is the most productive and consequently is the largest generator of wealth. In other words, "old people is still supporting young ones"

There are two main reasons for the persistence of this sector "aged", medical advances that have extended the life of the worker thereby decreasing their mortality rate, and slowness of economy to create new jobs in the United States. Other factors are also involved. Very few new domestic manufacturing are establishing in USA due to comparative advantages, since is much more convenient to open factories in China and other Asian countries or in Mexico and other Latin countries.

Particularly in China, the wage gap is huge because in this country, hopefully, the employee earns the equivalent of a dollar an hour job.

Now comes the most interesting problems. We live in a market society where obviously the  entrepreneur seeks to maximize its profit. In this respect and because of freedom guaranteed by our system, the employer is free to build where he likes. But, who gives work to the U.S. labor force?

The army of pizza makers and gardeners are also filled.

If you pays to cut your lawn for your home or for pizza delivery, people who receive the money, are receiving an income but are not generating wealth. If you open a shoe factory, will need to buy the equipment and supplies, hire employees, bank loans and export handling if necessary. Around a factory, always set a series of wealth-generating activities. Therefore, it is necessary to manufacture in the U.S. This is important to arouse the interest of the businessmans, giving them wage and tax offset to be able to compete with foreign markets.

 

 

BENJAMIN F. DeYURRE

Economist and Journalist