The National Bureau of Economic Research announced in December of 2007 that the United Stated economy had entered into a recession. The Business Cycle can be used as an indicator of the economic activity of the United States economy, and it indicates that the economic expansion is over, we have peaked and are now contracting. Texas, Florida, New York and California are all states that have been affected by the recession. These states have however had different impacts due to the different dynamics that makeup each individual state. Texas, Florida, New York and California have all had an impact on unemployment. All of these states have suffered from economic contractions and have yet to recover. Demand for labor is what increases or decreases the unemployment rate. (See graph # 1) Currently there is a high supply of labor but low demand for it, which is causing the increases in unemployment. Due to the economy being in such disarray, we are actually experiencing different kinds of unemployment, we are experiencing frictional and structural unemployment. In accordance with the Employment Act of 1946 which requires the government to use Keynesian Economics to maintain full employment in the United States, the government has interfered in hopes of stabilizing the economy. Therefore the government has used fiscal policy to implement a number of tax cuts in an effort to jump starting the economy. Tax cuts put more income in people’s pockets which enable them to consume more, more consumption leads to more need for production, more need for production leads to more need for labor, more need for labor in the long run leads to a decrease in unemployment. This circular flow pattern is known as the Circular Flow Model of economics. A decrease of unemployment nationally of course means a decrease in the unemployment rate for Texas, Florida, New York and California.
While many of the other states that account for the United States started feeling the effects of the recession that began in December of 2007, Texas continued to prosper gaining jobs for months after the announcement. “The Texas economy continued to grow through most of 2008, with employment peeking in August that year, then Texas joined the nation in loosing jobs.” (www.texasahead.org), 2010 The Texas unemployment rate did not begin to decrease until nearly a year after the United States reached its peek and began a contraction with the start of the economic recession that we are currently facing. Even after August when Texas did finally begin loosing jobs the Texas unemployment rate managed to stay below the National rate. “The Texas unemployment rate held steady over the past two months….and remains lower then the national rate of 9.7 percent,” said Tom Pariken, chairman of the Texas workforce commission. (Case 2010) At the time of chairman Pariken’s statement, the Texas unemployment rate was 8.2 percent. During 2008 the Texas economy continued to gain jobs because of its exports with Mexico, the slower house building segment and its high energy prices. (Case 2009) During this economic downfall for other states Texas still had a demand for labor which helped keep the unemployment rate down compared to other states and the United States as a whole. Texas had an economic advantage due to the states dynamics and location. The fact that it is a border state with Mexico gives it a tremendous advantage in times of economic struggles.
The U.S Labor Department reported the nation’s unemployment rate went up to 8.5% in March, as the employers eliminated 663,000 jobs. Since December 2007 we have been in a rescission; the United States has lost a net total of 5.7 million jobs. According to the St. Petersburg Times, Florida stopped laying off employees in the month of April, by helping the state’s unemployment rate drop to 9.8 percent to 9.6 percent. The Economy is doing very poorly and many upper class workers are finding themselves out of jobs. “If the economic situation was to get better, there is no guarantee that jobs will pick up again. Actually Florida was one of only six states that did not lose as many jobs in April. Some think otherwise. (Snaith) said “Once production increases, businesses will be able to meet the needs with the people they have. Even the Tampa Bay area had lost 53,400 jobs in the past year.
The national unemployment rate is 8.9 percent, up from 8.5 percent in March. The unemployment rate is not always dependable. There have been many surveys sent to households that ask Americans if they are looking for work still. Therefore people who have stopped looking for work are not marked as unemployed. The value of unemployment benefits in Florida differs from that of other states because each state unemployment office gives its own formulas and limits when adding the level of unemployment compensation. (Scott Powers), said that, “Florida lost more than 21,000 jobs in July from the month before, and its unemployment rate jumped to 6.1 percent the worst in more than 13 years. The way the economy is going in the state of Florida, it might take up to three years before Florida can recover and regain its financial hold.
“To help reinvigorate Florida’s economy, Gov. Charlie Crist recently announced the infusion of $165 million in federal economic stimulus funds directly benefit both job seekers and businesses,” said Cynthia Lorenzo, interim director of the Agency for Workforce innovation. www.bizjournals.com . In a recession, demand deficient unemployment will increase, if firms close down this causes employers to lay off workers. Therefore, it is very important that the government tries to boost AD which is call, (Aggregated Demand), and increase the rate of economic growth. The expansionary fiscal policy is to lower the taxes and rise the government spending. This will increase the AD and meanwhile, higher growth and jobs will be produced by reducing unemployment. If AD increases too fast, it will cause inflation.
The government also said that in the month of January and February Florida had inflation of 3%, but in January the inflation rate was 3.01%. So based off the rates, instead of the inflation rate being “flat”, it will be rising. Overall, I think we are slowly moving out of the rescission, and getting the economy back up and running.
According to an article in the New York Times it stated that in the past 30 years the unemployment rate in New York City has been at its peak more than any other country in the nation. It was also stated later in the article that the reason that the unemployment is so high is because of the lack of educated people in the city. A lot of them are high school drop outs, and then still don’t recover from such a thing. College graduates are 4.2% in the city as of 2009. Even with that lack of uneducated people they seem to be working with it very well. Unlike some others cities New York isn’t in the double digits like the other cities that were researched in this paper. In this city the supply for jobs are very high, but the demand for high school and college educations are low. I believe that if their education system was better than the unemployment might not be so high even with us being in a recession. Also according to the New York Times, New York’s concentration on talent made it easy for employment to stay high. People would also say the reason that people are still unemployed is because the people who do have jobs are being greedy. Unemployment will always be a big issue especially now that we are in this recession. I personally think that this is going to be really hard to fix. I believe that it starts all in the beginning like I stated before. This city is also one of the biggest cities in America so more people in the city do more jobs that you are going to need. I believe that if they were to pack up and move down South things would probably get a little better because the cost of living is not so expensive. Mainstream economics believes that unemployment is inevitable and is almost necessary to prevent inflation. According to Wikipedia trying to reduce unemployment is almost impossible because it will only result in less output and more inflation. In the end I believe that persistence will get you anywhere, and I believe that there are more jobs available they just keep them for the ones that want it the most.
In 1990 the unemployment rate in California was under 6%. In mid 1992 the unemployment rate reached a little over 10%. From 1993 to mid 2000 the unemployment rate decreased from 10% to around 4%. From 2001 to 2008 the average unemployment was 6%. Since 2008 there was a dramatic increase in unemployment. Since November 2009 the unemployment rate was 12.4%. In February 2010 California reached a record breaking 12.8%, the highest unemployment rate in California’s history. It was the fifth highest unemployment rate in the nation, 2.254 million people were unemployed. Only a few jobs gained employees during the recession; Educational and Health services, Information, and Financial Activities. Several jobs contributed to the recession by laying off employees in area such as; Government, Trade, Transportation, Utilities, Construction, and Manufacturing. Millions of people lost their jobs due to the recession. Millions of state officials lost their jobs as a result they had to work part-time at less paying jobs. Many people suffered from depression and committed suicide. Over 700 thousand people were receiving unemployment insurance benefits during the recession. The recession took a toll on many individuals, and many jobs were lost. The best way for someone to handle another recession is to have money saved in their bank, have other skills/trades that will always be needed, and a stable mind frame to keep moving forward.
The recession that the United States entered into in December of 2007 has taken its toll on many states, including Texas, Florida, New York and California. All these states have suffered from an increase in unemployment. Texas did not face the unemployment crisis until nearly a year later and has managed to keep the unemployment rate below the national level. Texas is still suffering just like Florida, New York, and California. All four states are experiencing economic contractions but the efforts to boost moral and consumption appear to be working. The unemployment rate has decreased slightly and will hopefully return to the pre December 2007 rate. If this happens then the government will have taken the appropriate actions to insure that Texas, Florida, New York, and California as well as the rest of the nation recover and expand economically.
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