Posts
It seems that every other week the media gets a fresh round of bad news to share with us, related to the current recession and its impact on the unemployment rate (which climbed to more than 7%). This morning I was reading that since the start of the recession the number of unemployed people has grown by 3.6 million, and the unemployment rate has risen by 2.3 percentage points. While this is hardly good news, it should at the very least get us to think about the way our lives have been when it comes to how we earn a living.
What happens in tough times such as now, where everyone tightens their belts? Businesses make less money and are usually forced to reduce their workforce, sending waves of people into unemployment. But at the same time, they also take a good look at their business practices to see where they can save money and be more efficient. As a result, a leaner business is more productive and offers its production to its customers at a lower cost. And it so happens that in such an environment, customers are more attracted than ever to low prices.
We always tend to look at competition from the point of view of businesses reaching out for customers and each of them saying that their offering is the best. It's time to start considering competition within the labor force too. When unemployment rises, it forces each worker to be on their best behavior so as not to lose their job. They become more productive and the businesses can do just as much with less employees, or more with the same number of employees. And wages either get frozen or decrease, making businesses even more productive.
When we hear the constant complaining about the unemployment rate here in the US, we might be tempted to think that our performance puts us as the worst performers of the developed countries. Yet a quick look around the world tells us that such is not the case. Actually, in the European Union, where many of the countries are also wealthy and belong to the group of the world's wealthiest nations, several countries have have rates that hovered around 8% for many years now, and sometimes even higher. This, and a look at economic history, suggests that our recent run at full employment (one of the definitions of which is unemployment below 5%) has come to en end and it's unreasonable to expect sustaining it over decades.
Finally, my main point is this one. The United States' current unemployment rate of 6.7 percent translates into 10.3 million people without a job. The state of Michigan is the hardest hit, with a double digit rate, because they depend heavily on the manufacturing business and the factories as their main source of employment. At the other end of the spectrum, Wyoming, with the lowest unemployment rate of only 3.2 percent because it's a farming state. Farmers are self-employed people who work hard as a family to make a living. In order to solve our current economic crisis, we probably should turn back to self employment.
That is not to say that we should all turn into farmers in order to solve the deepest financial crisis since the Great Depression. The idea is that we should stop relying on others to provide us with jobs. Wyoming's unemployment rate is the lowest of the country because it's hard to get fired when you're your own boss. If you can find something you're good at and can make money from, consider that the world is turning into one big village, and that the Internet allows you to do business anywhere in the world if you're so inclined. There have seldom been better times to consider being in business for yourself.
What happens in tough times such as now, where everyone tightens their belts? Businesses make less money and are usually forced to reduce their workforce, sending waves of people into unemployment. But at the same time, they also take a good look at their business practices to see where they can save money and be more efficient. As a result, a leaner business is more productive and offers its production to its customers at a lower cost. And it so happens that in such an environment, customers are more attracted than ever to low prices.
We always tend to look at competition from the point of view of businesses reaching out for customers and each of them saying that their offering is the best. It's time to start considering competition within the labor force too. When unemployment rises, it forces each worker to be on their best behavior so as not to lose their job. They become more productive and the businesses can do just as much with less employees, or more with the same number of employees. And wages either get frozen or decrease, making businesses even more productive.
When we hear the constant complaining about the unemployment rate here in the US, we might be tempted to think that our performance puts us as the worst performers of the developed countries. Yet a quick look around the world tells us that such is not the case. Actually, in the European Union, where many of the countries are also wealthy and belong to the group of the world's wealthiest nations, several countries have have rates that hovered around 8% for many years now, and sometimes even higher. This, and a look at economic history, suggests that our recent run at full employment (one of the definitions of which is unemployment below 5%) has come to en end and it's unreasonable to expect sustaining it over decades.
Finally, my main point is this one. The United States' current unemployment rate of 6.7 percent translates into 10.3 million people without a job. The state of Michigan is the hardest hit, with a double digit rate, because they depend heavily on the manufacturing business and the factories as their main source of employment. At the other end of the spectrum, Wyoming, with the lowest unemployment rate of only 3.2 percent because it's a farming state. Farmers are self-employed people who work hard as a family to make a living. In order to solve our current economic crisis, we probably should turn back to self employment.
That is not to say that we should all turn into farmers in order to solve the deepest financial crisis since the Great Depression. The idea is that we should stop relying on others to provide us with jobs. Wyoming's unemployment rate is the lowest of the country because it's hard to get fired when you're your own boss. If you can find something you're good at and can make money from, consider that the world is turning into one big village, and that the Internet allows you to do business anywhere in the world if you're so inclined. There have seldom been better times to consider being in business for yourself.
About the Author:
Before embarking on your self-employment journey, make sure you read up on filing for unemployment by visiting my financial blog.
No comments:
Post a Comment