How Unemployment Impacts Economies and Individuals

Abstract

Instructor’s Name Unemployment is a life event that is very devastating and can create a generation prospect. Despite many scholars and economists banging on the analogy that some little unemployment is inevitable, it has a significant cost to the individual society and country. Unemployment causes a financial crisis for an individual but also influences their mental and physical well-being. Various factors trigger unemployment; one of the most eminent is the recent Covid 19 pandemic that left millions worldwide jobless in a short time. The economic costs of unemployment are adverse. Unemployment causes increased government borrowing. Unemployment causes a decline in tax revenue and VAT due to less spending. There are various unemployment benefits the government needs to spend on to fulfill the needs of its people. Some of the benefits include housing benefits and medical and income support. The lost tax revenue is a derail to economic growth and sustainability. Unemployment affects consumer purchasing power. This then affects production and goods sold. According to the United States Bureau of Labor and Statistics, unemployment causes poor spending limiting the contribution to the economy (Elwell, 2013). The valuable resources for a steady economy are lost. People supposed to be productive fail to speed their energy in the right place. An unemployed doctor is a reason for slow economic growth. Where will they get the space to give back to the community and dispense their energy? They become a burden to the government due to the lost tax revenue and productivity. Unemployment causes psychological effects, which are a burden to the family, state, and government. The fate of the burden is an economic shutdown. The federal and state governments worldwide bear the burden of unemployment benefits, food assistance, and Medicaid (Peterson, 2012). Long periods of unemployment and retrenchment lower...