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Mod6Draft.docxRunning head: UNEMPLOYMENT ON A MACROECONOMIC SCALE 1
UNEMPLOYMENT ON A MACROECONOMIC SCALE 8
Unemployment on a Macroeconomic Scale
Myra G. Stallworth
Embry-Riddle Aeronautical University
Unemployment on a Macroeconomic Scale
Introduction
Unemployment is one of the major macroeconomic issues that policymakers and government agencies grapple to resolve due to the social and economic effect it has on the broader population of a given society. The unemployment has the effect of causing the nation to face antisocial behaviors such as the mugging, violence, drug and human trafficking, and family breakage. These social ills have the possibility of exposing a country to detrimental instability if they are not resolved. Equally, the economic effects such as the collapse of established enterprises and businesses transferring to foreign destinations is another injurious caused by unemployment crisis in the country. Consequently, it is essential for a country to reflect on the causes of the unemployment and the approaches that can be applied to resolve the problem effectively. Accordingly, the currently identified factors responsible for the unemployment in the United States have been discussed in the research paper. Similarly, the effective measures that should be considered to solve the American unemployment crisis have been deliberated in the discussion.
Unemployment Factors
One of the factors that have been cited for the unemployment macroeconomic problem in America is the technology development. The issue of the technology development entails the technology that is helping organizations to replace the employees with automation of the production process or the use of the robots. As such, the automation of the production processes by big corporations has seen millions of jobs were lost as the corporations seek to minimize the productions costs. According to Rensi (2016), MacDonald’s has introduced the self-service kiosks that will replace jobs at the organizations.
The jobs that are estimated will be replaced with the entrance of the self-service kiosk amounts to thousands of employees across the locations it has established operations (Rensi, 2016). This scenario of jobs been replaced by self-service kiosk technology has also, been cited at Wendy Company involved in the restaurant business (Snopes, 2016). The spiral effect of the continuous adoption of such e-service and automation technologies by the corporations has the effect of causing millions of Americans redundant even as the economy grows. Indeed, the cost minimization by the organization has the effect of increasing their profits while a substantial proportion of the population has no source of income to support their lives.
Equally, the advent and embracement of the robots by major companies employing thousands of the robots have seen massive workers been laid-off by organizations or organizations failing to hire new employees as the old employees retire. Robots have the effect of taking a task of multiple employees and at enhanced efficiency and accuracy compared to human beings. The ability of the robots to undertake multiple tasks, efficient and accurate compared to the human beings means those rational managers of the organization would prefer utilizing the robots to reduce the operational costs while maximizing the profitability at the expense of the national workers.
According to Rendall (2016), the preference for robots by the manufacturing sector is due to their enhanced safety and reliability. This observation means that the manufacturing sector would prefer involving the robots in the production process to the human beings. Consequently, a sizable proportion of the emerging employment force in the market will be denied the opportunity of entering the manufacturing sector, which has been the major source of employment in the American economy. Equally, the adoption of the robots by the manufacturing organizations will see current millions of workers in the sector been laid off to be replaced by the robots. Accordingly, the technology development is contributing to increment of unemployment in the country.
The relocation of the American manufacturing organizations to the foreign countries has also, been cited as the responsibility of contributing to the American unemployment. The recent trend has seen manufacturing companies moving to Far East Asian countries to produce their wares. The relocation to the foreign countries by the manufacturing companies implies that the employment opportunities they were offering to the domestic workers are exported to the countries of preference. Indeed, Rendall (2016) cites that Canada and U.S combined lost 5.6 million job opportunities from 2000 to 2010. A loss of 5.6 million jobs in ten years means that each year the two countries lose 0.56 million in the manufacturing sector to the foreign countries that is a substantial unemployment multiplier. Thus, the unemployment rate has been rising because the job opportunities the domestic workforce would have acquired have been exported to the foreign countries.
The huge trade deficit the U.S has means that local consumers are buying more goods from China than the Chinese consumers are consuming the American goods (Arnold, 2016). This scenario means that the U.S consumers are creating more job opportunities in China while killing local job opportunities due to the decreasing production of the goods at home. Consequently, the embracement of buying the goods from the foreign markets has the effect of contributing to unemployment in America.
The reflection on the two recent causes of the unemployment brings question on the reasons that are contributing the embracement of technology innovations by the American organizations to replace the workers and the increasing relocation to the foreign countries over the American market. This question is essential in enabling the policymakers to improve on the attractiveness of the labor force involvement, domestic production environment, and the American goods by the consumers. Accordingly, a discussion on the two critical issues has been extended in the research paper.
Adoption of Technology Innovations and Robots
The reason the American corporations are increasingly adopting the technology innovations and the robots to replace its workers is essential in helping the American society to resolve the unemployment problem. One of the issues that have been cited for encouraging the American organizations to consider involving the technology services and the robots to replace the workers is the recent increment of the wage rate law to $15 minimum wage for each hour. According to Rensi (2016), the successful fight for a minimum wage increase caused the American organizations to rethink on the approach to employ to see the minimum wage rise does not affect their profitability or cause the firms to suffer losses. Thus, the technology services and the robots offered the best opportunity of countering the labor cost increase due to the lower operational cost they expose the firms.
Accordingly, the higher pay demands by the trade unions are responsible for influencing the unemployment rate been experienced since they have been pushing the organizations to explore the technical measures to reduce the workforce volume. This realization demands a reflection on the approach that should be adopted by the policymakers to resolve the use of the technology innovations from exposing the American workers to unemployment. One of the responses that should be considered by the policymakers is imposing a tax on technology that causes significant unemployment in the country. The introduction of the tax has the effect of controlling aggressive adoption of the technology that is exposing the skilled workers to unemployment.
Equally, the tax collected from the technology adoption can be employed to support the downsized workers or unemployed skilled workers to start small businesses, which will protect their economic and social needs. The rationale behind this proposal is informed by the ethical consideration of the profit maximization at the expense of the citizen’s welfare. Even though technology development is legal business undertaking but progressive, it touches on the issue of ethical, economic development. The practice of adopting the technology to enhance the economic benefit of a small proportion of the population while exposing the rest to impoverishment and despair is unethical, which has the potential of stimulating social instability.
Manufactured and Sold Worldwide
One of the causes for the manufacturing firms to relocate to foreign countries such as China, Vietnam, and South Korea is due to the discounted wage rate of their markets compared to the American market. The strong trade union in America has been influencing the wage rate of the country to rise, which has the effect of causing the production cost of the American economy to expand significantly. This scenario has the effect of exposing the American firms to unfair competition at the international market because of the lower prices of the products from the foreign markets. Indeed, the globalization of the global market has seen protectionism measures against the local firms been eliminated across the world (Arnold, 2016).
Consequently, the American firms are forced to relocate their operations in foreign markets offering lower wage rate to enhance their global competitiveness. Similarly, the higher purchase of the goods from the international markets such as China compared to the locally produced products is because of the lower prices they offer to the consumers. Even though the campaign towards buying domestic products has been advocated by the past governments and the workers’ union to protect the loss of jobs to foreign markets, consumers have tended to be price sensitive in making their purchasing decisions. Thus, the domestic consumers have a high tendency of buying the imported goods over the domestically produced products (Arnold, 2016). Accordingly, one of the effective measures that have been proposed to protect the local employment from flowing to foreign markets is the introduction of a higher tax to local firms relocating to international markets while offering incentives to the firms maintaining their operations locally (Arnold, 2016). The move has the potential of encouraging the American organizations to retain their activities that will see the unemployment dropping.
References
Arnold. (2016). Macroeconomics 12e. New York: Cengage Learning.
Rendall, M. (2016). Industrial robots will replace manufacturing jobs-and that's a good thing. Retrieved 2018, from https://techcrunch.com/2016/10/09/industrial-robots-will-replace-manufacturing-jobs-and-thats-a-good-thing/
Rensi, E. (2016, November 29). https://www.forbes.com/sites/realspin/2016/11/29/thanks-to-fight-for-15-minimum-wage-mcdonalds-unveils-job-replacing-self-service-kiosks-nationwide/#2b1924874fbc. Retrieved 2018, from https://www.forbes.com/sites/realspin/2016/11/29/thanks-to-fight-for-15-minimum-wage-mcdonalds-unveils-job-replacing-self-service-kiosks-nationwide/#90873624fbc6
Snopes. (2016). Did Wendy’s Replace Workers With Machines? Retrieved 2018, from https://www.snopes.com/fact-check/wendys-kiosks-minimum-wage/
U.S-Census. (2018). Trade in Goods with China. Retrieved 2018, from https://www.census.gov/foreign-trade/balance/c5700.html
