Being out of work, especially for an extended period of time, is extremely painful—not to mention financially disastrous. However, unemployment hurts more than just the person who is out of work. In fact, when lots of people are without work, it has a huge negative impact on everyone.
When people mention the current unemployment rate, which is 7.8%, it's easy to assume that the rate means that the remaining 92.2% of the population is working. Of course, the official unemployment rate is a number that is typically lower than the actual number of people who want jobs but don't have them. According to the BLS, "Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work." This means that people who are out of work but haven't actually applied for a job in the past 4 weeks aren't counted. This includes people who are in job training programs or who have become discouraged about finding a job.
It's easy to see that the number of people who are out of work is going to be significantly higher than the official unemployment rate. Even if it wasn't, having a high number of unemployed people is bad for the overall economy and especially bad for people who are currently in the workforce. A recent article at Salon really brought the matter home for me and made me think about how the labor market is affected when so many people aren't working.
When there is a large pool of available workers, employers aren't under as much pressure to treat their current employees well. In fact, simply knowing that their employees would have a difficult time finding other work means that they can lower salaries across the board and demand a higher degree of productivity.
Already, we can see this happening in offices across the country. Employees are being required to work longer and harder without being given raises and bonuses. As employers strive to cut expenses, their current staff resigns itself to do whatever is required to hang on to their jobs.
As the unemployment rate goes down, employers will have to make some drastic changes to keep the workers they have and recruit new ones. As it is, many people accept jobs that don't pay as well as their previous positions, because something is better than nothing.
Have you seen this happening? Do you think that employers are taking advantage of their employees because they know that they can? Please share your thoughts in the comments.
Photo Credit: MorgueFile
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