Unemployment is a key barometer for the health of a job market. It measures the number of people without jobs as a percentage of the working-age population. But it’s important to consider other indicators when thinking about unemployment rates. In this article, we’ll take a look at the U-6 measure, which includes individuals who are involuntarily part-time workers who want full-time work and those who have given up looking for jobs as well as those with low wages (such as a mechanical engineer working as a cab driver). The U-6 rate can provide a more comprehensive picture of labor underutilization than a simple headline unemployment figure.
A high unemployment rate can have a number of detrimental effects, both on an individual level and on the economy as a whole. High unemployment can reduce consumer spending, which in turn lowers economic growth. It can also put a strain on government resources through increased reliance on social welfare programs and reduced tax revenue. Moreover, it can contribute to social unrest and feelings of hopelessness among the community.
The underlying causes of high unemployment vary from country to country. One of the main factors is cyclical unemployment, which occurs during periods of economic contraction or recession. This type of unemployment arises when decreased consumer demand for goods and services leads to reduced profits for businesses, which then cut back on hiring. Conversely, an increase in consumer demand can lead to higher hiring, which can lead to a reduction in unemployment.