Unemployment in the United States
Unemployment in the United States discusses the causes and measures of U.S. unemployment and strategies for reducing it. Job creation and unemployment are affected by factors such as economic conditions, global competition, education, automation, and demographics. These factors can affect the number of workers, the duration of unemployment, and wage levels.
Overview[edit]
Unemployment generally falls during periods of economic prosperity and rises during recessions, creating significant pressure on public finances as tax revenue falls and social safety net costs increase. Government spending and taxation decisions (fiscal policy) and U.S. Federal Reserve interest rate adjustments (monetary policy) are important tools for managing the unemployment rate. There may be an economic trade-off between unemployment and inflation, as policies designed to reduce unemployment can create inflationary pressure, and vice versa. The U.S. Federal Reserve (the Fed) has a dual mandate to achieve full employment while maintaining a low rate of inflation. The major political parties debate appropriate solutions for improving the job creation rate, with liberals arguing for more government spending and conservatives arguing for lower taxes and less regulation. Polls indicate that Americans believe job creation is the most important government priority, with not sending jobs overseas the primary solution.[3]
Unemployment can be measured in several ways. A person is defined as unemployed in the United States if they are jobless, but have looked for work in the last four weeks and are available for work. People who are neither employed nor defined as unemployed are not included in the labor force calculation. For example, as of September 2017, the unemployment rate (formally defined as the "U-3" rate) in the United States was 4.2% representing 6.8 million unemployed people.[4][5] The unemployment rate was calculated by dividing the number of unemployed by the number in the civilian labor force (age 16+, non-military and not incarcerated) of approximately 159.6 million people,[6] relative to a U.S. population of approximately 326 million people.[7] The historical average unemployment rate (January 1948-September 2020) is 5.8%.[4] The government's broader U-6 unemployment rate, which includes the part-time underemployed was 8.3% in September 2017.[8][9] Both of these rates fell steadily from 2010 to 2019; the U-3 rate was below the November 2007 level that preceded the Great Recession by November 2016, while the U-6 rate did not fully recover until August 2017.[4][8]
The U.S. Bureau of Labor Statistics (BLS) publishes a monthly "Employment Situation Summary" with key statistics and commentary.[10] As of June 2018, approximately 128.6 million people in the United States have found full-time work (at least 35 hours a week in total), while 27.0 million worked part-time.[11] There were 4.7 million working part-time for economic reasons, meaning they wanted but could not find full-time work, the lowest level since January 2008.[12]
The vast majority of persons outside the civilian labor force (age 16+) are there by choice. The BLS reported that in July 2018, there were 94.1 million persons age 16+ outside the labor force. Of these, 88.6 million (94%) did not want a job while 5.5 million (6%) wanted a job.[13] Key reasons persons age 16+ are outside the labor force include retired, disabled or illness, attending school, and caregiving.[14] The Congressional Budget Office reported that as of December 2017, the primary reason for men age 25–54 to be outside the labor force was illness/disability (50% or 3.5 million), while the primary reason for women was due to family care-giving (60% or 9.6 million).[15]
The Congressional Budget Office estimated that the U.S. was approximately 2.5 million workers below full employment as of the end of 2015 and 1.6 million at December 31, 2016, mainly due to lower labor force participation. This was very close to full employment, indicating a strong economy.[16] As of May 2018, there were more job openings (6.6 million) than people defined as unemployed (6.0 million) in the U.S.[17][18][19]
In September 2019, the U.S. unemployment rate dropped to 3.5%, near the lowest rate in 50 years.[20] On May 8, 2020, the Bureau of Labor Statistics reported that 20.5 million nonfarm jobs were lost and the unemployment rate rose to 14.7 percent in April, due to the Coronavirus pandemic in the United States.[21]
There are a variety of domestic, foreign, market and government factors that impact unemployment in the United States. These may be characterized as cyclical (related to the business cycle) or structural (related to underlying economic characteristics) and include, among others:
Political debates[edit]
Liberal position[edit]
Liberals typically argue for government action or partnership with the private sector to improve job creation. Typical proposals involve stimulus spending on infrastructure construction, clean energy investment, unemployment compensation, educational loan assistance, and retraining programs. Liberals historically supported labor unions and protectionist trade policies. During recessions, liberals generally advocate solutions based on Keynesian economics, which argues for additional government spending when the private sector is unable or unwilling to support sufficient levels of economic growth.[128][129]
Fiscal conservative position[edit]
Fiscal conservatives typically argue for market-based solutions, with less government restriction of the private sector. Typical proposals involve deregulation and income tax rate reduction. Conservatives historically have opposed labor unions and encouraged free-trade agreements. Conservatives generally advocate supply-side economics.[128]
Poll data[edit]
The affluent are much less inclined than other groups of Americans to support an active role for government in addressing high unemployment. Only 19% of the wealthy say that Washington should ensure that everyone who wants to work can find a job, but 68% of the general public support that proposition. Similarly, only 8% of the rich say that the federal government should provide jobs for everyone able and willing to work who cannot find a job in private employment, but 53% of the general public thinks it should. A September 2012 survey by The Economist found those earning over $100,000 annually were twice as likely to name the budget deficit as the most important issue in deciding how they would vote than middle- or lower-income respondents. Among the general public, about 40% say unemployment is the most important issue while 25% say that the budget deficit is.[130]
A March 2011 Gallup poll reported: "One in four Americans say the best way to create more jobs in the U.S. is to keep manufacturing in this country and stop sending work overseas. Americans also suggest creating jobs by increasing infrastructure work, lowering taxes, helping small businesses, and reducing government regulation." Further, Gallup reported that: "Americans consistently say that jobs and the economy are the most important problems facing the country, with 26% citing jobs specifically as the nation's most important problem in March." Republicans and Democrats agreed that bringing the jobs home was the number one solution approach, but differed on other poll questions. Republicans next highest ranked items were lowering taxes and reducing regulation, while Democrats preferred infrastructure stimulus and more help for small businesses.[3]
Further, U.S. sentiment on free trade has been turning more negative. An October 2010 Wall Street Journal/NBC News poll reported that: "[M]ore than half of those surveyed, 53%, said free-trade agreements have hurt the U.S. That is up from 46% three years ago and 32% in 1999." Among those earning $75,000 or more, 50% now say free-trade pacts have hurt the U.S., up from 24% who said the same in 1999. Across party lines, income, and job type, 76–95% of Americans surveyed agreed that "outsourcing of production and manufacturing work to foreign countries is a reason the U.S. economy is struggling and more people aren't being hired".[131]
The Pew Center reported poll results in August 2012: "Fully 85% of self-described middle-class adults say it is more difficult now than it was a decade ago for middle-class people to maintain their standard of living. Of those who feel this way, 62% say "a lot" of the blame lies with Congress, while 54% say the same about banks and financial institutions, 47% about large corporations, 44% about the Bush administration, 39% about foreign competition and 34% about the Obama administration."[132]
2008–2009 debates[edit]
The debate around the American Recovery and Reinvestment Act of 2009 (ARRA), the approximately $800 billion stimulus bill passed due to the subprime mortgage crisis, highlighted these views. Democrats generally advocated the liberal position and Republicans advocated the conservative position. Republican pressure reduced the overall size of the stimulus while increasing the ratio of tax cuts in the law.
These historical positions were also expressed during the debate around the Emergency Economic Stabilization Act of 2008, which authorized the Troubled Asset Relief Program (TARP), an approximately $700 billion bailout package (later reduced to $430 billion) for the banking industry. The initial attempt to pass the bill failed in the House of Representatives due primarily to Republican opposition.[133] Following a significant drop in the stock market and pressure from a variety of sources, a second vote passed the bill in the House.