Cause & Effect of Unemployment

Growth Trends for Related Jobs

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At any given time, the number of available workers typically exceeds the number of jobs available. This means that some unemployment is expected. However, unemployment rates fluctuate due to various factors that all affect the public and employers.

Market Fluctuation

The rules of supply and demand apply to all businesses. When the demand for a service or product is low, companies have a harder time making enough profit to pay employees. These companies often have to lay off workers and downsize to stay afloat, or they shut down altogether if demand remains low over an extended period.

Attitudes, Perceptions and Values

The goals and objectives of employees and employers play a role in whether an employee continues to work. For instance, an employer who is not willing to sacrifice company profit to keep workers employed may not have a problem letting employees go. Employees may leave the workforce if their beliefs and attitudes cause conflicts in the work environment.

Status of Employee

Employment is related directly to the employee's skill set and physical ability to work. If an employee is injured on the job, he may lose the ability to do the manual tasks required. Similarly, a worker may be let go if he fails to fulfill his job description, or if he cannot adapt to meet the demands of the company as the market, technology and business protocol change.

Economic Issues

When a territory, state or nation enters a period of economic recession -- which is caused by multiple factors -- companies sometimes have a harder time covering the costs of operations. Additionally, people don't have as much money to make purchases, so demand for products and services may decline. To reduce costs, companies must cut other areas of their budget or lay off workers.

Social Stigma

Even though some people lose their jobs through no fault of their own, unemployed workers sometimes suffer from a social stigma. Others sometimes believe that if the employee had only worked harder, or if he had put more effort into finding work, then he would have a job.


Unemployed workers face disruption in many areas of their personal lives. For example, they may have to uproot their entire family and move to take another job somewhere else, or they may run into problems with creditors because their income is too low to cover debts.

Physical and Emotional Distress

The disruption and social problems caused by unemployment often lead to problems with health, depression, stress and anxiety. For instance, Paul Solman of PBS noted that unemployment has been connected to higher instances of heart attack, lower self-esteem and increased medical visits.

Less Stable Economy

When workers are unemployed, they cannot put as much money back into the economy. This perpetuates the unemployment problem, as companies depend on spending to stay in business. Overall, this makes the economy less stable, increasing the strain on the government in terms of public assistance programs.