Unemployment in the United States

Unemployment in the United States discusses the causes and measures of U.S. unemployment and strategies for reducing it. Job creation and unemployment are affected by factors such as economic conditions, global competition, education, automation, and demographics. These factors can affect the number of workers, the duration of unemployment, and wage levels.

Unemployment generally falls during periods of economic prosperity and rises during recessions, creating significant pressure on public finances as tax revenue falls and social safety net costs increase. For example, employment expanded consistently during the 1990s, but has been inconsistent since due to recessions in 2001 and 2007–2009. As of May 2016, the employment recovery relative to the December 2007 (pre-recession) level was mixed. Variables such as the unemployment rate (U-3) and number of employed have improved beyond their pre-recession levels. However, the wider U-6 unemployment rate, measures of labor force participation (even among the prime working age group), and the share of long-term unemployed were worse than pre-crisis levels. Further, the mix of jobs has shifted, with a larger share of part-time workers than pre-crisis.

Government spending and taxation decisions (fiscal policy) and U.S. Federal Reserve interest rate adjustments (monetary policy) are important tools for managing the unemployment rate. There may be an economic trade-off between unemployment and inflation, as policies designed to reduce unemployment can create inflationary pressure, and vice versa. The U.S. Federal Reserve (the Fed) has a dual mandate to achieve full employment while maintaining a low rate of inflation. Debates regarding monetary policy during 2014–2015 centered on the timing and extent of interest rate increases, as a near-zero interest rate target had remained in place since the 2007–2009 recession. Ultimately, the Fed decided to raise interest rates marginally in December 2015.

The major political parties debate appropriate solutions for improving the job creation rate, with liberals arguing for more government spending and conservatives arguing for lower taxes and less regulation. Polls indicate that Americans believe job creation is the most important government priority, with not sending jobs overseas the primary solution. Much of the 2012 Presidential campaign focused on job creation as a first priority, but the fiscal cliff and other fiscal debates took precedence in 2012 and early 2013. Critics argued prioritizing deficit reduction was misplaced, as there was no immediate fiscal crisis but there was a high level of unemployment, particularly long-term unemployment.

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