Written by: Tiara Tran
Being unemployed is a scary situation to be in, but high rates of unemployment can lead to detrimental effects for both an individual and the economy.
Between February and May, unemployment skyrocketed from 6 million to over 20.5 million people. For those who have contributed to the workforce, they are able to file for unemployment and gain back a few hundred dollars each week to pay for food and basic necessities. Each state has different rules for how the amount of unemployment you receive is calculated, typically based off of your earnings in previous periods. However the amount is usually only enough to get by. The state tries to keep the amount of unemployment received low, to incentivize the unemployed to find a new job.
During March of 2020 amidst the shutdown, there was a CARES Act that was passed to extend the unemployment benefits. In fact, unemployed people received an additional $600 on top of their usual few hundred dollar unemployment benefits. The only requirement for those filing for unemployment is proof that they are actively searching for a job. This is because during the shutdown, the government did not see a reason to incentivize people to find a job when there were so few jobs available.
The reason behind these high levels of unemployment is a loss in the demand of goods, restaurants, and services from consumers. This caused millions nationwide to lose their jobs, because many businesses were experiencing extreme losses in profit. There was a sudden surplus of certain goods and services that couldn’t be sold, such as gasoline, flowers, flights, and many more. These businesses all lost enough money that they could no longer afford to pay their employees, sending the unemployment rates to record highs.
In many states such as Pennsylvania, Georgia, and Nevada, over a quarter of the state was unemployed by May 2. Not only is this bad for the individuals who are unemployed, it puts our economy in a spiraling downhill. High unemployment means that our economy is operating inefficiently, because there are many people who want jobs who can’t get one-- leading to lower output and incomes. With the unemployed spending less money, there is a lower output which leads to a lower GDP of the nation.
Bringing unemployment benefits would allow for many positive externalities. It not only helps the person who is unemployed, but it helps boost the economy because it keeps spending happening and businesses thriving. If the unemployed didn’t have money to spend, many businesses would not be able to earn that extra income, keeping their business going. Another positive externality would be lower crime rates among the city, because people do not have to steal in order to survive, which is beneficial for all people living in the city. This makes neighbors happier as well, because they are able to live in a safe community.
Unemployment benefits are an important economy concept to learn about, because they are crucial to keeping businesses, families, and neighborhoods running smoothly. Especially in 2020, when we are still at a lower unemployment rate than this time last year. Although the economy has improved greatly, entering into another shutdown, and therefore loss of employment, is still a possibility. For these reasons, it is important to know about your rights if you are to become unemployed.
Works Cited
“Unemployment Insurance During COVID-19: The CARES Act and Role of UI During the Pandemic.” National Employment Law Project, www.nelp.org/publication/unemployment-insurance-covid-19-cares-act-role-ui-pandemic/.
“Unemployment Insurance Relief During COVID-19 Outbreak.” U.S. Department of Labor Seal, www.dol.gov/coronavirus/unemployment-insurance.
“The Gender Unemployment Gap.” VOX, CEPR Policy Portal, voxeu.org/article/gender-unemployment-gap.
It's crazy that the USA is still failing to give out another Stimulus and has lacking unemployment benefits during a global pandemic, meanwhile a multitude of European nations such as Germany and the United Kingdom have subsidized 70-85% of their unemployed workers' wages.
ReplyDeleteThis was very informative about unemployment and the benefits that people receive when they are unemployed. I didn't even think to connect unemployment to crime rates, but I totally agree that by the government giving people money they will be less likely to commit crimes to get there basic necessities. It was also interesting to hear about how unemployment effects the economy as well because not only are there less workers, but there are also less people able to buy goods/services.
ReplyDeleteThis is another great example of ways that COVID has impacted us and the economy. I definitely agree that unemployment benefits can greatly help those people as well as other around them. It is no doubt that there are many positive benefits to unemployment benefits,are there any negative effects to that?
ReplyDeleteThis blog post was very informative and I enjoyed reading it especially since it is a relevant topic of how Covid has changed many of our lives. Many of the families within our own community have faced the struggle of unemployment due to our countries economic fall from the pandemic. I wonder why certain states - such as the states you mentioned in one of your paragraphs - suffered more from unemployment than other states. Do you think that this was due to the pandemic we are facing or a more consistent financial struggle?
ReplyDeleteCurrently, unemployment causes people to act more and more truculent; however, creating unemployment benefits may reduce the rue people feel when they lose their job. If people were able to easily get by without working, there would be a decrease in dexterous individuals. An emissary might even argue that too many unemployment benefits are harmful to a nation. When people lose their jobs, it causes them to repine. With that in mind, employment benefits are important to keep an economy afloat, and allow people the security they need while they find a new job. I appreciate your viewpoint on the importance of these benefits, but they are only helpful to an extent.
ReplyDeleteThis blog post illustrated a clear perspective of how the population was effected by the Covid-19 pandemic. I completely agree that by inciting extra unemployment benefits during a global pandemic brought positive change for the U.S.. However, it is also important to point out that this incentive so to say could lead to negative patterns if the U.S. isn't careful about just how much benefits they are handing out simply because the economy wouldn't be able to handle the change if more and more people were relying on the unemployment benefits alone. With all of this in mind, the unemployment benefits that were initially implemented had larger benefits than cost because it helped people survive during a global pandemic when there were more and more scarce products.
ReplyDeleteThis blog is very informative in regards to unemployment effecting the economy. I didn't realize that unemployment benefits had a positive impact on the economy, but now that I've read through this, it makes a lot of sense. I wonder, is there any way to fix the issue of mass unemployment? Or would we have to wait till COVID was over to start rebuilding?
ReplyDeleteI appreciate the information provided in this post, as it extends to multiple benefits and impacts of the unemployment rates as well as the government provided unemployment benefits. Though the additional $600 provided on top of the usual benefits is a short-term solution, will this influence an unemployed member of society to strive to get a job if the government continues providing? And how may this increased spending hurt the government's financial state in general?
ReplyDeleteI thought you did a good job at analyzing the impacts of unemployment and what it should mean to society and us as high school students. You effectively explained how crime rates would be impacted as people are more stressed about getting by, economic stimulation, etc. I think it would be an interesting point to include analysis about the racial impacts since you delved into the state based statistics. We see a higher number of POC communities in states that are more heavily impacted, illustrated by the darkest blue, being states like Louisiana, Pennsylvania, and Michigan. That connection to the section about the impact on various states would really complete this piece. Overall, you got the point across and was written well too.
ReplyDeleteI really liked reading about this topic. I have never thought about unemployment as something that could be good or helpful to the individual, nor the economy. After reading, I now realize that there are actually many benefits to unemployment, not only to the individual, but also to the economy. By the government allowing people giving people who filed for unemployment extra money they were actually helping themselves. At first I was confused on why that would be giving extra money, but it makes sense because the more money they give, the more money the individuals are able to spend, which in turn will help the economy which is/was really struggling during the Covid shut down. I wonder if changes will be made to how unemployment works after everything is back to normal.
ReplyDeleteI agree that COVID-19 has had detrimental effects on the U.S. unemployment rate and the economy as a whole. You made very good points regarding how unemployment money will help continue to stimulate the economy as well as possibly reduce crime rates. However, I would also like to acknowledge that the money the government is handing out isn't coming out of thin air. I definitely agree that the unemployed need to receive money to live off of but I also agree with the fact that the amount should be low enough to cause they person to want to find a job so that they can make an amount of money they are more satisfied with rather than depending on the government to pay for their well being. Of course, during the pandemic it is harder to find a job so it makes sense that more money is being handed out but I wonder how that might be contributing to national debt or how else they are getting this extra amount of money to hand out.
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