Unemployment – A Problem Within The Business Cycle

23Jun10

The business cycle is characterized by specific phases.  These phases–peak, recession, trough, and recovery–are the fluctuations (i.e. up and down) in the level of economic activity.  Thus, the unemployment rate is an indicator of the health of the economy.  When unemployment is high, consumer spending declines.  This decline in consumer spending affects businesses who must struggle to survive.  In turn, these businesses are forced to cut cost to sustain itself.  Cutting cost include having to trim the payroll.  

An important aspect related to unemployment is “unequal burden.”  Unequal burden means those who are affected by unemployment are disproportionate.  For example, people who are higher-skilled have a better chance of being employed than lower-skilled workers.  Similarly, other factors such as age, gender and race affect who are more likely to be unemployed.  As you may know, males are generally higher paid than their female counterparts in the same position.

A couple of years ago, I made the difficult decision to leave work and go back to school.  I had to cut back on expenses drastically.  Emerging two years later, I can say I made the right choice.  Sure, the labor market is still lousy and I may not be making the kind of money I should as a highly educated worker right now.  Thus, the problem within the business cycle…  

According to the U.S. Census Bureau, in 2009 a total of 15, 260 who were 18 and over earned Master’s Degrees.  Comparably in the same year, 40,276 earned Bachelor’s degrees and 70,044 earned a High School diploma.  By earning a higher degree, I have reduced my chances of being part of the population who carry the “burden” of unemployment.  Of course, I am one of the few lucky enough to be able to go back to school to earn a higher degree.

What ideas might you suggest in decreases one’s chance of being unequally affected by unemployment?

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