unemployment

The Columbia Encyclopedia, 6th ed.

unemployment

unemployment, condition of one who is able to work but unable to find work. Once assumed to be voluntary, idleness was punishable by law; however it is now recognized that unemployment often arises from factors beyond the control of the individual worker. Unemployment may be due to seasonal layoffs (e.g., in agricultural jobs), technological changes in industry (particularly by increased automation), racial discrimination, lack of adequate skills by the worker, or fluctuations in the economy. For the purposes of government statistics, a unemployed person is someone who is without a job and actively looking for work; a person without a job who is not looking or has stopped looking for work is not counted as unemployed. The unemployment rate thus is not an indicator of the percentage of people of working age who do not have jobs. The term underemployment is often used to describe the condition of those who work part-time because full-time jobs are unavailable or who are employed at less-skilled work than they are qualified to do.

In developing countries, unemployment is often caused by the urban migration that generally precedes the industrial development needed to employ those migrants. In industrial nations, increases in unemployment are the result of economic slowdowns, recessions, or depressions. In the Great Depression of the 1930s unemployment rose to 25% of the workforce in Germany, Great Britain, and the United States. Similar rates occurred in Greece and Spain, due in part to different causes, during the early 2010s.

In the post–World War II era most of W Europe and Japan generally kept their unemployment levels below 3%, and by the late 1960s the rate in the United States, where there had been far more fluctuation, was down to less than 4%. Since the 1970s, however, worldwide economic changes have generally kept the U.S. unemployment rate above 5%. It was greater than 10% in 1982, the highest rate since 1940, and the rate was considerably higher among nonwhite minorities and the young, approaching 50% among African-American teenagers in urban areas. By 1990 the average unemployment rate had dropped to almost 5%. It fluctuated between 5% and 7% for most of the 1990s but dropped to around 4% by 1999 before a recession (2001) led it to rise to 6.3% in mid-2003. It subsequently dropped to 5% by mid-2005 and hovered between 4.8% and 4.4% for most of 2006–7. By late 2009, however, it had risen to 10.1% as a result of the deepest recession since the early 1980s, and slowly dropped to below 6% by late 2014. At the same time, however, many people left the workforce and were not counted in the employment figures. Underemployment and unemployment combined exceeded 17% in 2009, the worst such rate since at least the 1970s and perhaps since the Great Depression.

As Keynesian economics (see Keynes, John Maynard) gained influence among policymakers, more countries committed themselves to finding ways to approach full employment through government intervention. Governments, in addition to trying to increase employment opportunities by stimulating business, have also taken other measures to deal with the problem. In the United States, the Social Security Act of 1935 and the Employment Act of 1946 represented moves in this direction; in Great Britain, labor exchanges were set up and a contributory unemployment insurance system established. Under the Communist economic systems of the Soviet Union and the People's Republic of China, attempts were made to eliminate unemployment by socializing the means of production and distribution and by directing labor into more productive channels, but their governments typically proved unable to reallocate labor appropriately, leading instead to unneeded production or underemployment. The disintegration of the USSR and economic liberalization in China ended such efforts.

Bibliography

See C. A. Greenhalgh, ed., The Causes of Unemployment (1983); D. N. Ashton, Unemployment under Capitalism (1986); J. Hudson, Unemployment after Keynes (1988); L. H. Summers, Understanding Unemployment (1989); R. Vedder and L. Gallaway, Out of Work: Unemployment and Government in 20th Century America (1993).

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