The consequences of unemployment for the individual are financially and often emotionally destructive. The consequences for the economy can also be destructive if unemployment rises above 5-6%. When many people are unemployed, the economy loses one of its key drivers of growth -- consumer spending. Quite simply, workers have less money to spend until they find another job. If high national unemployment continues, it can deepen a recession or even cause a depression. That's because less consumer spending from unemployed workers reduces business revenue, which forces companies to cut more payroll to reduce their costs. This can become a downward spiral very quickly.
One of the consequences of the Great …show more content…
This is called structural unemployment. Many of them are 55 or older. They may not be able to get a good job again, despite laws prohibiting age discrimination. They may get part-time or low-paying entry jobs to make ends meet, then become unemployed again until they can take down early Social Security benefits at age 62. For this reason, many economists think the recession permanently increased the natural rate of unemployment.
In Iraq, historically, economic expansions were the constant companions of war. Indeed, a controversy in science of economics is that “Marxists claim that war is necessary for full employment?” a concrete response to this we are yet to find. In World War II, for example, defense outlays rose by almost 10 percent of total GDP before Pearl Harbor, and this spending boosted the economy out of the doldrums of the Great Depression. Similar but smaller military buildups accompanied the economic expansions in the Korean and Vietnam Wars.
2.1.8 Types of Unemployment
There are three main types of unemployment: structural, frictional and cyclical. The first two make up the natural unemployment rate, while the third rises when demand falls, usually during a recession.