The Positive & Negative Effects of Unemployment

Unemployment is among the most important economic issues to the average worker. Unemployment occurs when a worker wants a job but does not have a job and cannot find an employer. Workers often become unemployed by being laid off from a job, but workers attempting to enter the workforce that were not laid off, such as recent college graduates, are also considered unemployed.

Income and Consumption

Unemployment tends to result in less income by workers, which can have far-reaching economic effects. Workers who lose jobs may be unable to pay bills like rent, mortgage payments, insurance and utilities. This can lead to an accumulation of debt, home foreclosure and in some cases, bankruptcy. When workers in the economy struggle financially, they have less money to spend on discretionary consumer purchases. Economic growth depends on consumer spending; if consumers do not have money to spend, it can reduce growth.

Psychological Impacts

Unemployment can have negative effects on the mental well-being of workers and their families. The New York Times reports that almost half of unemployed workers have experienced anxiety or depression and four in 10 parents notice differences in the behaviour of their children. Many workers take pride in being able to provide for their families; unemployment can eliminate that source of personal satisfaction.

Unemployment Compensation

While unemployment often leads to lower income, workers who are laid off may have access to benefits that make up for part or all of the income they lost for a certain amount of time. Some companies offer severance packages to workers they lay off, which can include pay and benefits, often based on the amount of time the worker has been with the company. Workers can also apply for government-provided unemployment benefits to bridge the gap between jobs.

New Careers

Unemployment can be beneficial in that it can give workers the time and incentive to pursue new career avenues and education. For example, if a factory worker is laid off, he might decide to go to college and end up with a better paying job that makes him happier in the future. If a certain worker simply isn't good at a certain type of job, unemployment can help push him into a career field that better fits his skills.

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About the Author

Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.

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