Slow economic growth has contributed to the high unemployment rate in the United States since the recession in 2008. As of July, 2012, the unemployment rate has remained at 8.2%. This was the same in June, 2012. The rate will continue to remain high because firms are not hiring or investing as uncertainty increases in the global economy. President Obama has taken steps to change this. One of his policies was extended, Operation Twist. Operation Twist is the third policy introduced by the Fed, since the recession in 2008. Operation Twist is an idea that the Fed can drive up prices by purchasing long-term bonds. This in turn will drive down the yield. While this is happening, they will sell short-term bonds and in turn increase the yield.
The Fed has used $400 billion from September 2011 to June 2012. The Central Bank has extended the program from July 2012 to the end of the year, December 2012 with the Fed injecting $267 billion in assets. This program makes loans less expensive for consumers to purchase high end durable goods: such as houses, vehicles, and projects. If loans are cheaper for people the greater the chance a person will take out a loan. Once people start spending these loans, on other things besides bills, many firms will have to start hiring people to increase production. The people hired will decrease unemployment and increase the money floating in the economy, and the process starts all over again.
Bridge to Work, is a program by President Obama, which helps the long-term unemployed get hired. The catch is the firm who hires is not obligated to pay them or even hire them after the eight week training session. I am not sure about many, but if I had to be at work at 8am and get out at 6pm like everyone else, do the same job as everyone else, not be paid unlike everyone else, and not be hired after eight weeks, I would be very upset. I would be in a worse situation than I was prior to starting the program. The opportunity cost would have to outweigh the actual cost. In order to be a part of the program the unemployed has to meet some requirements, which include running out of the 26 week state-funded benefits.
College unemployment rate, 53% of Recent College Grads Are Jobless or Underemployed. It doesn’t sound very good when we are in our last semester of college. According to the article, 53% of college graduates are either unemployed or working a job that does not require a degree. With increasing college tuition and low paying jobs post-graduation, people begin to wonder if it is even worth continuing education. Of course each degree is different and there are different opportunities for everyone, but I would not like to be underemployed after graduation.
After being over 8% unemployment for many months now I beging to wonder, is this going to become the new unemployment rate? I hope not.
Gilbert
ReplyDeleteThank you for your article being that unemployment has been a concern for many Americans. Unemployment has stayed higher than usual but we are far better off then in 2008. I'm not sure if I agree with you on Obama's policies just because I'm not in favor with spreading the wealth. Call me old school but I don't think that's what our founding fathers had in mind.I just don't believe adding more debt to the Us is the answer to get our economy rolling again. I know in my personal life I would not put myself in more debt thinking in the long run it will increase future profit for me, in fact it will do the opposite and dig my hole deeper. I believe we should just let the markets run it's course and we will stabilize just as our past history has shown us.
Very interesting article Gilbert. Obviously unemployment is a seemingly growing problem. I have to agree with Sarah on the policies mentioned. The money spent is not free money and there are negative consequences to each of the policies mentioned. My experience has been that the majority of degreed people that are underemployed or unemployed have the wrong degree, or not enough experience. There has to be a need for the skills obtained in college or the money spent on the education is waisted. Also, there are some cases that a degree alone will not suffice, and experience is required to accompany the degree. This might alter some of the underemployed numbers if taken into account that some are working to gain experience. Hopefully our nations leaders will be able to help with the problem. The law of supply and demand might fix the problem for us?
ReplyDeleteThanks,
Craig A.
Gilbert,
ReplyDeleteThis is an interesting and intriguing article. I hope the unemployement rate at the very least stays the same and doesnt get higher. Though it would be great to see it get lower so us new grads will be able to find a career and not just a job. And since 53% is a very high number so I am keeping my fingers crossed.
Though one of my co workers and I were talking about Verizon laying off 1700 workers; I just hope it doesnt become a trend.
You hit the nail on the head when you said that the opportunity cost would have to out weigh the actual cost.
I found your article very interesting. I think the fact that we are all about to graduate puts this article into persepective for many of us. It seems to be all we hear these days is how a friend of a friend can't find a job and they have a degree. In the meanwhile here we all spending money on college and just hoping that have a different fate. Hopefully our generation can improve this unemployment problem so that future generations will continue schooling and not feel it was all for nothing. And lets hope 8% is not the majic number.
ReplyDeleteDemocrats have continued to introduce smaller stimulus packages and unemployment benefits extensions, with limited success. Crossover votes from moderate Republican Sens. Susan Collins and Olympia Snowe have allowed some legislation to pass. In August 2010, the two were the only Republicans to vote with Democrats on a bill to give $10 billion to prevent layoffs of teachers, firefighters, police officers, and others. In 2011, Bush-era tax cuts are set to expire, sparking a debate over whether they should be extended. Republicans want to keep all the tax cuts in place, but Democrats prefer to let the cuts for people in the top tax brackets expire. Republicans argue that these taxes also catch many small businesses, which create jobs.
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ReplyDeleteGilbert,
ReplyDeleteI completely agree with you on the Bridge To Work Program. It would be very difficult to work a job and take the chances of not getting hired after eight weeks and also not getting paid for the work.. However, the economical conditions are certainly making people desperate for jobs. As stated many college graduates are unemployed or working a job that does not require a degree. The Bridge To Work Program is a way for people to show their capabilities and hard work to potential employers. On the contrary, it is definitely a loss for someone to work for nothing. Very interesting article, I enjoyed reading it.