Unemployment and the Economy

Unemployment has become a big fear for everyone in the US this year as the economy worsens and big companies as well as small businesses have already begun to layoff some of their workers. Companies such as Target have let "go about 9 percent of its headquarters workforce, the deepest cuts in company history." (Star Tribune). Because of the recent factors in the economy, corporations like Target have had to let go several workers from their labor force to try and save their company from losing money and to cut costs to seek better profits. Even small businesses are being hurt also and many have been forced to go out of business and liquidate their products. In December 2008 a reported 524,000 jobs were lost and the number of unemployed workers is said to continue to rise to almost to 9% by 2010. Even some economists are more worried about the new economic stimulus plan Obama has created because "Obama claims his plan will 'create or save' 3 million jobs over the next two years. But the crisis is presently destroying over 500,000 jobs a month. Even if his plan is adopted and implemented in full, the jobs it creates will be overwhelmed by the ongoing contraction, leading to a further rise in the unemployment rate to double-digit levels" (wsws.org).

This crisis of unemployment rates relates heavily to what we are currently learning in the class room. For one, it shows how the economy can effect large and small businesses through the supply and demand of the world economy. While the economy has started to dwindle down less people are willing to pay for the goods they usually buy, like luxury items, and some have even been using substitutes to lessen the cost of their bills. While the demand for some products might be up, like basic goods such as milk or bread, others have gone down, such as companies who sell new cars, or homes, because of the recent housing market crisis. Also the Market System has been a major factor in the role of these companies, mainly because of competition. As we have seen, Target sales have gone down because of current incomes being reduced or slashed, while dollar stores have actually increased their profits.

My opinion is that our government should stop wasteful spending on luxuries for the cabinet members and start to get to work on the economy to stop the current rate of unemployment to rise. If we don't, I believe that the economy will get even worse and the sales of big corporations will fall do to the lack of money in these future jobless households. These companies will be forced to lower their prices and soon they'll probably brake even or worse on their luxury goods, since the demand would be low because of effect of lower incomes. Hopefully our unemployment rate will lower in the next year or two to balance out the economic downfall happening as we speak, but for right now this number of unemployed people will probably get higher and higher.


http://www.startribune.com/business/38457219.html?elr=KArks8c7PaP3E77K_3c::D3aDhUxWoW_oD:EaDUiacyKUnciatkEP7DhU
http://www.wsws.org/articles/2009/jan2009/jobs-j10.shtml