Key Concepts in Economics Essay

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Schwartz, N. D. (2016). Wages Rise as U.S. Unemployment Rate Falls Below 5%. The New York Times.

Key Points from Article



According to the article by Schwartz (2016), the United States unemployment rate crossed the 5% mark. In particular, owing to a steady decrease in employment and having healthy employment, the rate of wages substantially increase, which is an indication that the job market might be tightening substantially to compensate more to attract and retain workers. Secondly, the unemployment rate declined to its lowest of 4.9% in the past eight years (Schwartz, 2016). The past half-year have been the paramount protracted period for employee remunerations from the time when the recovery started six-and-a-half years ago. The third key point is that economists have pointed out that this decline in the unemployment rate are a suggestion that the United States economy has been steadying up well despite the fact that the Chinese economy has been experiencing a slowdown, the increasing risks in the emerging markets, and also volatility in the stock market (Schwartz, 2016). In addition, the significant improvement in the economy can be perceived in the increase in the number of jobs as well as a major decline in the unemployment rate from 2009.

Application of Economic Concepts



There are various economic concepts that can be applied to the points highlighted above. The first economic concept is unemployment. Unemployment takes into account a circumstance where factors of production are willing and capable of being employed at the ruling market wage rates but are involuntarily unutilized or under-utilized. The unemployment rate solely attempts to measure involuntary unemployment. The number of unemployed individuals will rely on the rate of expansion of work prospects, which in turn relies on the rate of growth of the economy, the production technique utilized, and government policies (Arnold, 2010).

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As pointed out in the article above, the unemployment rate in the American market has improved and declined to 4.9%. Part of the improvement in the aforementioned unemployment is in hidden unemployment. This can be defined as the unemployment that takes place when the work available to a certain workforce is insufficient to keep it fully employed so that some members of the workforce could be withdrawn without loss of output. As pointed out by O'Sullivan et al. (2010), in the course of period of poor economic performance and slow economic growth, the level of unemployment substantially rises and becomes a cause of public concern. On the other hand, in the course of good economic performance and rapid economic growth, there is a decline in employment, but does not disappear altogether. Therefore, the decline in the unemployment rate is indicative of a period of economic performance in the United States.

How Concept would affect the U.S. Economy



The concept of unemployment would have an impact on the United States economy in various ways. Owing to the 2008 financial crisis, the United States economy experienced its highest rate of unemployment as it hit the 10% mark. However, eight years later, the economy experienced its lowest mark in the period as it hit the 4.9%. This is indicated in the illustration below:



Statistics indicate that in December 2015, there was an increase of 262,000 jobs and in the following month January, there was an increase of 151,000 jobs. This constant increase in the rate of….....

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References

Arnold, R. A. (2010). Macroeconomics. Ohio: South-Western Cengage Learning.

O'Sullivan, A., Sheffrin, S. M., Perez, S. J. (2014). Principles, Applications, and Tools, 6th Edition. Boston: Upper Saddle River.

Schwartz, N. D. (2016). Wages Rise as U.S. Unemployment Rate Falls Below 5%. The New York Times. Retrieved from: https://www.nytimes.com/2016/02/06/business/economy/jobs-report-unemployment-january-fed-interest-rates.html

The Balance. (2017). US Economic Outlook: For 2017 and Beyond. Retrieved from: https://www.thebalance.com/us-economic-outlook-3305669

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