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.
All this is merely a prelude to my main point, which is the following. While the country's average unemployment rate is 7.2%, Michigan has the highest rate at a little over 10%, and Wyoming has the lowest rate, at a little over 3%. Why the difference? Michigan's source of employment is primarily manufacturing and big factories. Wyoming is mostly a state of self-employed dairy farmers. The solution to our current economic crisis will probably come through the realization that self-employment is something we should get back into our collective minds as a viable option.
Like I said earlier, times are not good. My main point is not that farming is the answer to our problem. It is that a self-employment mindset is. Wyoming has managed to keep their unemployment rates way below the national average because you cannot get fired if you work for yourself. That, the reach of a global economy, plus the power of the Internet combine to make the idea of a career change into something more personal look better than ever.
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.
All this is merely a prelude to my main point, which is the following. While the country's average unemployment rate is 7.2%, Michigan has the highest rate at a little over 10%, and Wyoming has the lowest rate, at a little over 3%. Why the difference? Michigan's source of employment is primarily manufacturing and big factories. Wyoming is mostly a state of self-employed dairy farmers. The solution to our current economic crisis will probably come through the realization that self-employment is something we should get back into our collective minds as a viable option.
Like I said earlier, times are not good. My main point is not that farming is the answer to our problem. It is that a self-employment mindset is. Wyoming has managed to keep their unemployment rates way below the national average because you cannot get fired if you work for yourself. That, the reach of a global economy, plus the power of the Internet combine to make the idea of a career change into something more personal look better than ever.
About the Author:
If you've been laid off, make sure you read up on filing for unemployment by visiting my financial blog.
0 comments:
Post a Comment