United States Unemployment – History, Causes & Consequences


United States Unemployment – History, Causes & Consequences

Unemployment is one of the major issues that the whole world is fighting. For a country like the United States of America which one of the strongest economies of the world unemployment is a huge hurdle for their economic growth. In this article, we will see the history, causes and consequences of unemployment in the US.

Measurement of employment

The monthly employment report of the government of the United States is based on two surveys. They are the Establishment Report and Current Population Survey (CPS). Establishment Report is created by taking samples from random employers and the payroll of their employees. The CPS is created by taking data about employment from nearly 60,000 households. Based on the information that they get from these reports the BLS provides the approximate number of employed and unemployed Americans.

Causes of Unemployment

People might have different perspectives on unemployment. But there are three major reasons for unemployment. They are frictional unemployment, structural unemployment and cyclical unemployment.

Frictional Unemployment

Frictional unemployment is there is every country. It is more of temporary unemployment of an individual. It is the transition time of a person when he is moving from one job to another. It will vary from person to person. Some might just take just a day to get into a new job and there are will be some who might even take a month to find a new one. Employers restraining themselves from hiring new people or downsizing the employee number by laying off the workers may also lead to frictional unemployment.

Structural unemployment

When the demographic or industrial composition of a local economy is not matching structural unemployment is created. To put in simple words the unemployment caused if there are job openings and people in the locality does not possess the necessary skills for the jobs is called structural unemployment.

Cyclical Unemployment

The unemployment caused when there is not enough demand for services and the products offered by the companies. Cyclical Unemployment is one of the common causes because any business whether it is large or small tends to bust due to certain reasons.

History of Unemployment

wage growth

It was in the 1950s that the Government of the United States started to track unemployment. Unemployment was at its peak during the 1930s because of the Great Depression. The unemployment rate was almost 23.6%. The unemployment was at its lowest during World War II, 1944. Most of the people were employed in the armed forces, and the unemployment rate was 1.4%. Since 1948 the United States has faced nearly 11 recessions. During the 1980s the unemployment reached 10.8% percent. It was between 4 to 6 percent during the presidency of Bush and Clinton. It again reached 8 percent in September 2012. Former President Obama tried to bring the American Job Act that was not proposed by Congress.


Unemployment has a negative effect on both the individual and the country. It will affect the economic status of the individual and the economic growth of the country. If unemployment progresses by time, there are good possibilities that it will affect the GDP, FDI and a lot of other growth aspects of the nation.

It will create the exploitation of labor, industrial disputes, political instability, depression in economic growth, increase in poverty, and loss of human resources.

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