It seems that every other week the media gets a fresh round of bad news to share with us, related to the current recession and its impact on the unemployment rate (which climbed to more than 7%). This morning I was reading that since the start of the recession the number of unemployed people has grown by 3.6 million, and the unemployment rate has risen by 2.3 percentage points. While this is hardly good news, it should at the very least get us to think about the way our lives have been when it comes to how we earn a living.
I remember reading somewhere on the Net that the current wave of frugality is, in a way, hurting the economy because people are spending way less than they used to. This, in turn, causes businesses to make less money and lay off people. This way of seeing things only looks at part of the picture. While laying people off is one of the first cost-reducing measures, business also look at their operating habits to spot where they can reduces costs and/or be more productive. Being more productive means they will be able to offer their goods and services at lower prices because they're being more competitive. And lower prices are just what their customers will be looking for.
Rising unemployment also breeds competition among employees, which is something that is rarely thought about when the concept of competition is mentioned. High unemployment rates makes people more aware that they have to perform to keep their jobs, and they tend to be more productive. If there have been layoffs, a reduced staff ends up doing the same amount of work; if there have been no layoffs, the same staff does more work. Finally, depending on the company, workers agree to pay freezes or even pay cuts to keep their jobs, which helps companies' bottom lines.
As much as we're complaining about the unemployment rate here in the United States, ours is one of the lowest of the developed world. In many advanced countries of the European Union, it has been around 8% for quite some time. It's probably time for us to come to terms with the realities of basic economics and realize that we have been enjoying full employment for some time (defined by the economic condition when everyone who wishes to work at the going wage rate for their type of labor is employed) and it might not come back any time soon, as it's the exception rather than the norm.
Finally, my main point is this one. The United States' current unemployment rate of 6.7 percent translates into 10.3 million people without a job. The state of Michigan is the hardest hit, with a double digit rate, because they depend heavily on the manufacturing business and the factories as their main source of employment. At the other end of the spectrum, Wyoming, with the lowest unemployment rate of only 3.2 percent because it's a farming state. Farmers are self-employed people who work hard as a family to make a living. In order to solve our current economic crisis, we probably should turn back to self employment.
That is not to say that we should all turn into farmers in order to solve the deepest financial crisis since the Great Depression. The idea is that we should stop relying on others to provide us with jobs. Wyoming's unemployment rate is the lowest of the country because it's hard to get fired when you're your own boss. If you can find something you're good at and can make money from, consider that the world is turning into one big village, and that the Internet allows you to do business anywhere in the world if you're so inclined. There have seldom been better times to consider being in business for yourself.
I remember reading somewhere on the Net that the current wave of frugality is, in a way, hurting the economy because people are spending way less than they used to. This, in turn, causes businesses to make less money and lay off people. This way of seeing things only looks at part of the picture. While laying people off is one of the first cost-reducing measures, business also look at their operating habits to spot where they can reduces costs and/or be more productive. Being more productive means they will be able to offer their goods and services at lower prices because they're being more competitive. And lower prices are just what their customers will be looking for.
Rising unemployment also breeds competition among employees, which is something that is rarely thought about when the concept of competition is mentioned. High unemployment rates makes people more aware that they have to perform to keep their jobs, and they tend to be more productive. If there have been layoffs, a reduced staff ends up doing the same amount of work; if there have been no layoffs, the same staff does more work. Finally, depending on the company, workers agree to pay freezes or even pay cuts to keep their jobs, which helps companies' bottom lines.
As much as we're complaining about the unemployment rate here in the United States, ours is one of the lowest of the developed world. In many advanced countries of the European Union, it has been around 8% for quite some time. It's probably time for us to come to terms with the realities of basic economics and realize that we have been enjoying full employment for some time (defined by the economic condition when everyone who wishes to work at the going wage rate for their type of labor is employed) and it might not come back any time soon, as it's the exception rather than the norm.
Finally, my main point is this one. The United States' current unemployment rate of 6.7 percent translates into 10.3 million people without a job. The state of Michigan is the hardest hit, with a double digit rate, because they depend heavily on the manufacturing business and the factories as their main source of employment. At the other end of the spectrum, Wyoming, with the lowest unemployment rate of only 3.2 percent because it's a farming state. Farmers are self-employed people who work hard as a family to make a living. In order to solve our current economic crisis, we probably should turn back to self employment.
That is not to say that we should all turn into farmers in order to solve the deepest financial crisis since the Great Depression. The idea is that we should stop relying on others to provide us with jobs. Wyoming's unemployment rate is the lowest of the country because it's hard to get fired when you're your own boss. If you can find something you're good at and can make money from, consider that the world is turning into one big village, and that the Internet allows you to do business anywhere in the world if you're so inclined. There have seldom been better times to consider being in business for yourself.
About the Author:
Before embarking on your self-employment journey, make sure you read up on filing for unemployment insurance benefits by visiting my finance tips site.
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