Unemployment in America: Historical Perspective - Research Paper Example

? Unemployment in America: An Historical Perspective Unemployment in America: An Historical Perspective Introduction America has long been perceived as an economic powerhouse. The country, after all, is considered to be the ‘Land of Opportunity’, and has been home to countless immigrants through the years. These individuals have left their own country in search of new opportunity and promise. They desired a land where they could follow their dreams and achieve true economic freedom. For the most part, America has lived up to this perception throughout its young and storied nearly 240 year history. It has not always, however, been the wealthy and pretentious country it has been portrayed to be. Throughout its history, unemployment has been a figure of great concern. There have been periods of extremely low unemployment, followed by some alarmingly high periods of unemployment where even the most experienced and educated among us have struggled to find work. To progressively move towards a more free and prosperous country in the future, it is important to understand the historical trends of unemployment in America, the people affected, and the overall impact on American society in general. Historical Unemployment Trends in America Actual unemployment figures in the United States are only available from the 1940s onward, but we do know that American has went through cyclical trends of employment throughout its formation. As recently as 2009, the unemployment rate was over 10% and continuing to rise (Beyers, 2013). While many in the younger generation believe this was as bad as it has ever been, history certainly tells us otherwise. Interestingly enough, in the early days of America, employment was almost guaranteed. Simply considered the vast area of our land and couple that with the reality that the population of the country actually started off quite small, and America had the perfection economic and employment conditions under which to thrive (Closson, 1895). And, thrive the country did during those early years. There was so much to be done after the Revolutionary War that nearly anyone who wanted a job could have one. This was particularly true because of the agrarian nature of the early Republic. There were relatively few factories, so as soon as those were built and opened, much staff was needed. In addition, farming work in the late 1700s and 1800s was incredibly labor intensive, so the job that takes one person today required as many at 50 a few hundred years ago. As such, unemployment was basically unheard of and not even counted for nearly 180 years after America gained its independence (Closson, 1895). As America began to expand, the need for laborers expanded right along with it. Consider the Homestead Act of 1862. This government policy gave every adult American up to 160 acres of public land, with the one provision that they agreed to cultivate and put it to use within five years. This created a renewed vigor and America that was based on expansionary and visionary thinking (Closson, 1895). Because of this, once again, more people were needed to cultivate the land given out nationwide than there was actually available in the workforce. Even Americans who were considered down on their luck during this time period quickly discovered that they had more ‘job’ offers that they could imagine. The mood in the country was quite bright as employment was high, and the possibilities seemed limitless. Again, there was no perceived need to count unemployment due to the fact that everyone who desired a job had one. As the land began to become cultivated, however, and the industrial revolution began to sweep through America, changes were certainly on the horizon. It should be pointed out that farming work, and cultivating land, did not pay much and it became increasingly difficult to sustain a family on somebody else’s land. As such, as soon as factories began to be built in full force in the latter part of the 17th and salty 18th centuries, there was a mass migration to urban city centers in order to find more sustainable employment. While the hours were long, and the pay was not great, most Americans found that factory jobs provided better opportunities in the long run. As time went on, however, technology advanced and not as many people were needed in the factories as in decades previous (Kunovic, 2012). Add to this the fact the immigration to the United States was spiking, and the country discovered for the first time in its history that there were more people than jobs. It is important to remember that this time period in America’s history illustrated the beginning of Capitalism in the new country. Entrepreneurs, mostly in the form of factory owners, were focused on maximizing their own pockets. It was also during this time that stock in company began to be sold, allowing people to invest in various companies that depended on maximum production, while minimizing expense. No longer was the concern actually finding employees, as in years previous there was a substantial labor shortage, but rather the focus now was on ensuring that only the most skilled and productive workers were hired. Many laborers simply discovered, over time, that their skills were no longer needed and they had to scramble to other cities to find work (Diamond, 2013). Initially, this was still possible as there was usually a business or factory somewhere that was is need of workers, but by the 1920s the number of available workers exceeded the number of job opportunities for the first observable time in America’s history. Throughout the 1920s and 1930s, the country went through periodic instances of noticeable unemployment. Owing to various factors and political influences, however, such trends were often short-lived and generally just resulted in a restructuring of society based upon available employment options. As the decade of the 30s dragged on, however, it became apparent that the country has simply expanding to quickly and was spiraling towards a catastrophic collapse As the Great Depression hit, thousands upon thousands lost there jobs and their savings, with little hope being available to quickly rebuild. As a result, estimates are that, by the year 1933, as many as a quarter of all working aged adults in America were mired in unemployment (Gatzia, 2012). As one can see, this is much higher than the recent 10% mark that was hit. One also has to keep in mind that the population in America during this time was only about 125 million, compared to over 350 million today. With a full 25% of Americans out of work, it was quite significant, given the reality that many of those not reflected in the unemployment numbers were from the South, owning their own sustainable land, or they were agricultural workers with relatively stable employment options. As a result, this time in the history of unemployment in America hit the industrialized north particularly hard, nearly crippling many of the urban cities in existence. Naturally, since the Great Depression, America has been quite concerned about the unemployment rate, and it was not long after this time in history that statisticians began to track various trends existent in the labor market. In the interim, unemployment has been a center of nearly every Presidential election campaign cycle since the 1940s, and job creation and sustainment remains the focus of the platforms of most politicians to this day (Beyers, 2013). President Roosevelt himself had the honor of becoming President of the United States during the height of the Great Depression. The task of lowering the unemployment rate, therefore, rested largely on his shoulders. Desperately trying to find a way out of the economic depression that was causing so many Americans to live hand to mouth, when just a few decades prior the country was struggling to even find enough workers, Roosevelt implemented numerous policies. For the first term of his Presidency, many of his ideas simply did not work, and unemployment remained unacceptably high. Part of the problem was the Roosevelt was desperately trying to not allow America to go into debt. Yet, it was noticeable that one way of this mess was for the government itself to find a way to provide Americans with jobs. Roads needed to be built, for example, and there were numerous infrastructure problems in existing cities that were sorely in need of attention. By 1938, Roosevelt passed through his New Deal with the American people. The concept was relatively simply. America would go into a bit of debt initially in order to rebuild itself into an economic powerhouse. At the same time, Americans would be put back to work, and money would flow back into the economy once again, allowing numerous businesses the opportunity to only be formed, but to flourish. At the beginning of the New Deal in 1940, the unemployment rate was still hovering at nearly 15%. By 1944, the unemployment rate was already down to 1.2% and America was well on its way to recovery (Hakulinen, Kelitikangas-Jarvinen, & Jokel, 2013). That, however, would not be the last time that the country has struggled with unemployment, as the issue does truly rear its head periodically in cycles. People Most Impacted by Unemployment Unemployment does not just impact those who cannot procure a job. Historically, high unemployment has come about during periods of recession. A high number of people not working equates to less money being circulated within the economy. Therefore, it can be said that many sectors of society have historically be impacted by unemployment, beyond just the individual who is on the unemployment roster. Entire families can be affected by unemployment, particularly children. Since unemployment figures started being announced in the 1940s, children have been the forgotten ones when discussing this issue. Society seems to quickly forget the children living in poverty and without adequate means to receive a proper education have a more difficult time of gaining employment themselves upon becoming of age to work. During the height of the recent recession, for example, the number of household where children resided and at least parent was unemployed rose to over 3 million (Beyers, 2013). When people are out of work, the entire network of individuals in society that depended on a certain level of income coming is affected. Effects of Unemployment on Society Through the Years As a Capitalistic country that prides itself on the free enterprise system, unemployment through the years has had a dramatic impact on the economy of society. In effect, however, capitalism has demonstrated a need for certain levels of unemployment through the years in order to drive ingenuity and growth. While America realistically did have a zero rated of unemployment during the early years of its existence, that was driven by a variety of factors that simply no longer exist. Historically, a zero rate of unemployment is not only near impossible to attain, but it is not something the capitalists see as necessary to better society. Throughout the years, unemployment has, at various times, followed either a cyclical, structural, or frictional period that can be reflective of that state of the economy and its impact on society over time. History has shown us that there are various business cycles that America has gone through that has been at time painful, and at other times a cause for rejoicing. The truth is that if business were always on the way up, then there would not be any opportunity for the financial and business market to adjust. As such, at various periods in the last 100 years, there has been cyclical unemployment that generally follows the nature of the economy in the United States. During ‘boom’ times, unemployment is low and seemingly everyone has disposable income. An example of this can be demonstrated during the time periods immediately following the world wars. With everyone returning home from years away, there was much to be done and employment was easy to find. After a certain amount of time, however, the markets equalized, businesses became saturated products, and there was simply not enough buying power left to sustain that level of employment. Gradually, cyclical unemployment kicked in and the rate increased noticeably (Gatzia, 2012). Periods of American history have also exhibited structural unemployment. According to Gatzia (2012), “Structural unemployment occurs when the jobs that are available do not match with the skill sets of the unemployed workers - it typically results from international competition or technological changes” (p. 37). With America opening its border to legal immigrants, and the rest of the world catching up to us technologically, the nation has long been seen as the land of opportunity. Quite often individuals from others countries have come to America with highly skilled credentials in certain areas, which provides a glut in certain markets. Over time, this has created structural unemployment where there are simply too many works in a given field to sustain adequately employment levels. In addition, structural unemployment has occurred when there simply is no longer a new for workers in various fields. An example of this can be seen during the recent financial crisis that began in 2008. Many sectors of society simply struggle. One example in the contraction industry. Workers in this field struggled to find employment, causing the unemployment to spike because of the sheer number of people that work in the field. The rate will stay high until these workers either retrain for other industries, or the economy picks up sufficiently to provide more jobs in the construction industry once again. This also occurred years after the public works projects of the New Deal was introduced. Workers became highly skilled in industry, yet eventually there was no longer a need for them, once again resulting in structural unemployment (Kunovic, 2012). Ironically, through the ages, structural unemployment has proven beneficial to capitalistic society in the long run. This is due to the reality that the phenomenon sparks technological ingenuity, as competition for the best jobs becomes fierce. In addition, workers in one industry that find themselves out of a job with no immediate prospects for the foreseeable future often retrain their skills, thereby adding to their existing capabilities. This has created the well-rounded labor force that we now see evident throughout many sectors in America today (Gatzia, 2012). Frictional unemployment has also occurred at various times throughout America’s history. According to Gatzia (2012), “Frictional unemployment corresponds to the turnover of labor - it typically results either from job loss or increases in the number of people entering the workforce. It is also viewed as a positive occurrence because it purports to be conductive to mobility” (p. 37). This, coupled with other historical trends in unemployment, have actually provided a basis for which society and government bases many of the their economic decisions. Realizing these trends, for example, caused the federal government to actually legally mandate an unemployment of about four percent back in the 1970s. The reality has been, however, that it has proven quite difficult to maintain this level, actually lowering to below four percent in April of 2000. Since the 90s, the average unemployment rate in the United States has been roughly 6.2%, which is quite respectable and certainly manageable for a capitalist economy the size of ours (Diamond, 2013). It should also be noted that rising rates of unemployment are associated with depression. Beyers (2013) noted that, “Unemployment is a serious problem because is significantly lowers overall satisfaction with and have mental health consequences that are negative, widespread, and sometimes severe” (117). This was certainly send during the Great Depression when suicide rates spiked for the first noticeable time in America’s history, and throughout the unemployment spikes in the 1970s when an abnormally high number of families began to break up. Unemployment affects society in America because the number one issue facing many families centers around finances. When jobs are plentiful and money is flowing throughout the economy, it is often reflected in the mood of the country. When unemployment is high, as has been seen in the previous five years, not only is consumer satisfaction down, but people seem generally unhappy with their stature in life in general (Hakulinen, Kelitikangas-Jarvinen, & Jokela, 2013). Conclusion This paper has touched upon some of the major trends in unemployment observed through the centuries. The number of people out of work can often be seen as proportional to the state of the economy. That is fairly logical. There are numerous other implications that unemployment has, however, that could not be touched upon here. We need to be remind that unemployment does not just affect the psyche of the individual who is out of work, but the entire family support structure as well. In addition, society must often grapple with programs to support those in need, particularly during times of severe hardship. When unemployment is low, this is relatively easy to accomplish, yet it becomes an almost insurmountable task when millions are out looking for a job. By way of example, we can conclude by going back to the days of the Great Depression. For the first time since the days of the Civil War, society was rocked with nearly 25% of its population that simply, almost overnight, could not longer support themselves. The effects were staggering and felt in nearly every segment of every community. This was the era when soup kitchens were first introduced, and it was during this time period that charitable giving took on an entirely new meaning. Out of this rose the understanding that unemployment was a necessary evil in capitalistic society, and was an issue that must be properly planned for. While nobody looks forward to the prospect of being out of work, American society is now much better equipped to handle the perils that come with this life event than ever before. So, history is certainly likely to repeat itself in this regard. Unemployment will continue to go in cycles for decades to come, as the country lives through time of hardship only to come out stronger and more prosperous in the end. As many say, that is simply the American way. References Beyers, W. (2013). The great recession and state unemployment trends. Economic Development Quarterly, 27(2), 114-123. Closson, C. (1895). Notes on the history of unemployment and relief measures in the United States. The Journal of Political Economy, 3(4), 461-469. Diamond, P. (2013). Cyclical unemployment, structural unemployment. IMF Economic Review, 61(3), 410. Gatzia, D. (2012). The problem of unemployment. Economics, Management, and Financial Markets, 7(2), 36. Hakulinen, C., Kelitikangas-Jarvinen, L., and Jokela, M. (2013). History and unemployment: A two-way relationship? Journal of Vocational Behavior, 83(2), 153-160. Kunovic, R. (2012). Perceived unemployment. International Journal of Sociology, 42(4), 100-123. Read More