Factors Affecting Unemployment Rate

It is important to keep in mind throughout this analysis that all statistics and assumptions are establish on numerous models used by government economists who take apart the relationship between the number of eligible utilizationers in the model force and the number of jobs available.

These monthly labor reports are issued for each one month and released by macroeconomic advisers and a survey of these reports manifest that since 1992, the un interlocking commit in the United States has gone from 6.7 percentage to 4.5 percent in 1998. In today's job market, sixty-four of every ampere-second American adults is working compared with 52 in 1929 and 55 in 1967. "And although discrimination continues, women and minorities have far more opportunities than ever before. Blacks, for example, right off have 7% of the nation's management and executive jobs. There aren't compensate good records of what that number was in the Sixties" (Lambro, 1996, 3).

In 1992, president Clinton promised to create 8 million new jobs by the course of study 2000. He accomplished that in 1996, although there is strong weigh concerning the quality of those jobs, specifically over the question of whether they are irregular and low-wage or full-time and high-wage jobs. The House Republican Conference, for instance, claims that all solely 758,000 of the jobs created since 1992 are part-time (defined as anything less than 30 hours of work a week).

Relationship of Inflation to Unemployment

F. When consumers spend more, there is a greater need for goods and services, whence companies hire more workers.

E. Lower interest rates feed consumers spend more.

3. Employees getting higher wages (i.e. $3.10 an hour in 1980 versus $5.75 an hour in 1998) should result in more disbursement dollars available for consumer goods which is in itself an inflationary situation.

1. Forcing employers to pay more currency in wages is an inflationary act that, by definition, should depress the employer's employee-buying funds.

Applying the eight basic assumptions of the typical econometric model (A-H above) it would be logical to expect a decline in the employment rate for these reasons:

Cooper, J.C. & Madigan, K. (1997, December 29).

Where to Invest in 1998: The framework, Business Week, 3559, 74.

tion entrust be considered to mean simply a loss in buying power of a currency. The Federal Reserve progress that controls interest rates, lowering them by increasing the money bring and raising them by decreasing the money supply controls inflation, within this simplistic definition. Along with the four assumptions (A-D above) there are indisputable accepted assumptions concerning the interest rate theories. They are:

This typical formulation, then, has many economists puzzling over why the aspects of this model do non hold up today. How can it be that the economy at the same time experiences both the lowest inflation rate and the lowest unemployment rate for the first time in decades? Does this imply that the models are not working? An even deeper question is whether or not the plan of economic models in and of themselves have outlived their usefulness?

Strobel, W.P. (1996, May 2). taking credit when it is  and isn't -- due?, The Washington Times, 10.

One of the most unique situations that economics modelers face is the relationship between the Minimum plight Act and the unemployment rates. When the Clinton presidency began, the Minimum Wage was $3.10 a
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