Low Unemployment means Workers Finally have the Upper hand

Document Type:Research Paper

Subject Area:Economics

Document 1

The improvement in the oil sector coupled with other Federal government investment policies has seen companies like Colorado Springs, Greely expand their operations thereby increasing the demand for employees. Mainly, as more people get employment opportunities, the pressure on unemployment benefits decline, and the government can undertake crucial public investment. Eventually, increased investment form both the private and public sector leads to a rise in GDP. Higher GDP level coupled with low birth rates means that the real per capita incomes is high. High per capita income means households have high living standards. The improvement of real GDP means real per capita income also rises. Growth in wages in Colorado links well with the rise in GDP over the recent months.

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In spite of the positive economic growth, households must prepare to meet the inevitable increase in the prices of nondurable and durable commodities. Paper objective The paper aims to explore the state of unemployment and the contribution of the various sectors towards the growth of Colorado. A decline in the unemployment rate has important implications for the economy including changing wage levels, inflation rates, and GDP growth index. This increase represents nearly 3. 2% rise in unemployment in October. However, this is way below the national index which stands at 3. Markus concludes that as unemployment declines, workers can shop around for better jobs (2018a). However, labor market experts express the uncertainty about investor’s access to labor in the coming years should unemployment rate continue declining.

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According to Ahmad & Khan, low unemployment rates means that there are high education levels and hence skills, adequate availability of investment capital, and an overall decline in population (2016). As more job opportunities open, and few people are available to work, then investors plunge into operational challenges as households can shop for better jobs as well as negotiate for better wages. There are high chances that with the increased unemployment rate, the real disposable incomes rise and eventually, GDP improves (Mosikari, 2013). Additionally, the decline in the unemployment rate has a direct effect on the consumption behavior of households. A study by Ganong and Noel in 2017 found a strong relationship between unemployment insurance (UI) and level of household incomes. The growth in employment opportunities in companies like Greeley is at the behest of spiking oil prices in Q2 2018.

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Besides, the rise in oil price meant that the companies could effectively lower their production costs, maximize output, with the subsequent increase in the profits enabling more investments in the sector (Markus 2018b). The growth is due to the improving economic conditions in Colorado which promise more investment efforts. Besides, changes in Federal Corporate Tax policy from 35% to 20% induces investors to undertake more investment activities which will require more labor in the coming years (Djankov, 2017). The graph below shows the impact of changes in oil price. The advent of the federal cut in corporate tax from 30% to 20% continues to improve the labor market, with investors’ increase in earning implying more investments. The growth in nonfarm, financial services and mining directly characterize the escalating job opportunities which effectively contribute to the decline in the number of people applying for unemployment insurance.

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The constant changes in unemployment rates for nearly two decades impacts on the companies operating in Colorado surreptitiously ranging from the prospects of declining personnel availability to increased employee bargaining power. It is inevitable that if the situations remain unchanged, all industries could face an acute shortage of workers which will see wages increase uncontrollably. Fortunately, some of the companies could contemplate quitting operation. , & Khan, J. An Analysis of the Causes and Consequences of Unemployment in District Peshawar. Retrieved from https://mpra. ub. uni-muenchen. org/p/iie/pbrief/pb17-14. html Ganong, P. , & Noel, P. Consumer spending during unemployment: Positive and normative implications.  Unpublished manuscript, U. A. , Saboor, A. , Mian, S. A. , & Anwar, A. researchgate. net/publication/271105127_The_Effect_of_Unemployment_Rate_on_Gross_Domestic_Product_Case_of_South_Africa Svaldi A.

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