Economics

The global financial crisis has had a profound impact on the economy of the United States. One of the most important ways that the crisis has impacted the United States is in causing unemployment rates to rise significantly. As one of the leaders in the global economy, the United States had been a staple country in terms of employment statistics. The recent crisis caused employment to double in many areas around the country, pushing America further into a financial hole that has, at times, seemed quite dire. This happened for a number of reasons, including companies needing to cut costs, entire industries hitting the wall, and temporary or unskilled workers just not being necessary anymore. These factors were all exacerbated by the heightening financial crisis and combined to bring unemployment to a problematic level in the United States over the last past two years.

According to a report done by the Directorate for Employment, Labour, and Social Affairs, the financial crisis has had an impact on developed nations around the world. Their report specifically cites the United States, saying, Recent trends and the projections over the next two years point to significant differences across OECD countries. The downturn in economic activity took effect earlier in the United States, where the unemployment rate reached 6.5 in October and the rate of job losses in consecutive months hit a seven-year high. Over the past 12 months, the number of unemployed persons has increased by about 2.8 million in the United States (OECD). According to that report, it all started with the need for companies to cut back on costs. One of the things that had long made the American economy a strong one was the job security of skilled workers. Those individuals believed they were secure in their positions with various firms, but the economic crisis showed them and companies that very few workers were truly expendable. Many of these workers had dedicated their lives to various companies and their tasks, so when they were laid off, it was difficult for them to jump into a new job with a new company. Unemployment statistics can often rebound when the majority of people being laid off are young workers, as those individuals have the ability to bounce back and land in other jobs. As the report indicates, the recent crisis has forced many companies to cut ties with older, more established workers, which has slowed the recovery significantly.

Another way that the economic crisis has caused unemployment increases in the United States has to do with the near shut down of entire industries. Few financial crises have had this sort of overwhelming impact on specific industries, which has caused widespread job loss in sectors like the auto world. This is the most prominent and pronounced industry to consider. According to a report from the Portal for North America, The automobile industry worldwide is in the midst of an unprecedented crisis. The bankruptcies of Chrysler and GM have made taxpayers major shareholders in these carmakers (PFNA, 2009). The resulting job losses have totaled in the tens of thousands. When there is relative balance across the economy, it can help employment recovery, but when an entire industry is affected like it has been in this financial crisis, things can get especially dicey.

Many economic pundits have placed much of the blame on the fact that companies do not need to retain certain types of employees. In addition to cutting loose long-time employees, companies are also cutting back on the unskilled labor that they hire. Consultants fall into this group, as well, according to the OEDCs report. The report states, Historical experience suggests that youth, immigrants, low-skilled and older workers are more likely to bear the brunt of rising unemployment. Workers holding temporary contracts are also particularly vulnerable to an economic downturn (OEDC). If two people have jobs that could be combined into one job or completed by someone already on staff, companies are taking the initiative and becoming more efficient. Though that might bode well for the companys bottom line at the end of the quarter, it does very little to help the unemployment windfall that has taken place as a result of the crisis.

In total, the issue seems to be a perfect storm of different factors, all contributing to bring the countrys employment situation to its knees. With one or two factors, the economy might be able to right itself and more jobs might open up, but with people of all experience levels and proficiency levels being laid off, it is apparent that the situation is significantly more dire. When one considers that an entire important industry within the United States has lost tens of thousands of jobs over the last two years, it is easy to see where the problems are coming from. The crisis has effectively forced companies to cut back, and workers are the ones paying the price for this. Until the global economy starts to right itself once again, no help will be in sight for these companies or these workers.

Works Cited
Organization for Economic Co-Operation and Development. Impact of the economic crisis on employment and unemployment in the OECD countries. Directorate for Employment, Labour, and Social Affairs.  httpwww.oecd.orgdocument630,3343,en_2649_33927_41727231_1_1_1_1,00.html
Portal for North America. The Auto Industry in Crisis Causes and Consequences for American Recovery. 2010.  httpwww.portalfornorthamerica.orgevents201006auto-industry-crisis-causes-and-consequences-american-recovery.