High unemployment rates have a great impact on the economy and purchasing power of consumers. In the article, “Unemployment Checks” Owens and Stettner underline that current unemployment affects both the economy and employers, the government financial resources, and the jobless population. The researchers found that “new jobless benefits claims have reached levels that surpass the surge in claims when Hurricane Katrina washed ashore” (Owens and Stettner 2008). The main problem for the USA is long-term unemployment which is “now more than 17% of all unemployed workers” (Owens and Stettner 2008). The data for total income or total consumption provides little meaningful information about any individual or family confronting an infinite variety of goods and services and forms of saving. The constraint of consumers’ scarce means requires an analysis of how total purchasing power is distributed among families and individuals — sometimes called households or consumer units. Purchasing power consists of more than income, which refers to receipts of earnings from current production. American consumers can buy goods and services with borrowed money, or they can use past savings for current spending.
The information found in the text unveils the causes and factors of economic changes and near crisis. The researchers included current and past data and facts which help readers to understand and compare economic figures and rates of unemployment in the USA. the article vividly portrays that the state should introduce new regulations and programs in order to improve the situation and reduce the number of unemployment. If nothing is done, in several years unemployment rates will be high and the government will need more financial resources for social benefits and social security programs. Consumers’ income, referring to their “scarce means,” is the amount available for spending and saving, and therefore differs somewhat from the total, or national, income. Large parts of the total earnings of the economy are not available to consumers to spend or save: corporations, in order to pay for capital goods, often retain profits rather than distribute them to their stockholders; government withholds taxes; and part of the consumers’ income is earmarked for direct taxes — the property or income levies of local or state or Federal government. “With prices and unemployment rising and jobs and wages falling, workers feel the economy is already in a recession” (Owens and Stettner 2008). The sums shown on the chart as “Other” represent transfers of income, payments that do not reflect current earnings by the recipients. The growth of the American economy, as the last chapter illustrated, led to striking changes in consumption choice. Equally striking have been the changes in income and purchasing power that are produced. Protection affects chiefly what alternatives are available and the information that consumers use in reaching a decision, although government credit controls influence the means of payment. Wages and salaries make up the bulk of income since most consumers sell their services to business firms, to the government, or to other consumers. Some income is earned by what consumers themselves own: Proprietors’ and Property Income includes dividends, interest, the profits of an unincorporated business, and rents. The data and facts found in the article portray that government programs are of more concern than government policies for income and consumption outside the market. And to understand such protection activities, the entire process of consumer choice and purchase provides a useful framework. Unemployment benefits should be increased in order to protect the unemployed population from poverty and maintain high standards of living.
Work Cited
Owens, Ch., Stettner, A. Unemployment Checks: Keep ‘Em Coming. BusinessWeek. 2008. Web.