Just a few minutes ago I turned on my TV to watch a bit of news and sure enough, there was a mention about the unemployment rate being at over 7%, and how that spelled disaster for the economy, and so on, and so forth. Now I'm not saying that this stuff is not newsworthy, not am I saying that it's not unfortunate (people are losing everything they own in the process), but at the same time, a little bit of perspective never hurts.
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.
Rising unemployment also breeds competition among employees, which is something that is rarely thought about when the concept of competition is mentioned. High unemployment rates makes people more aware that they have to perform to keep their jobs, and they tend to be more productive. If there have been layoffs, a reduced staff ends up doing the same amount of work; if there have been no layoffs, the same staff does more work. Finally, depending on the company, workers agree to pay freezes or even pay cuts to keep their jobs, which helps companies' bottom lines.
As much as we're complaining about the unemployment rate here in the United States, ours is one of the lowest of the developed world. In many advanced countries of the European Union, it has been around 8% for quite some time. It's probably time for us to come to terms with the realities of basic economics and realize that we have been enjoying full employment for some time (defined by the economic condition when everyone who wishes to work at the going wage rate for their type of labor is employed) and it might not come back any time soon, as it's the exception rather than the norm.
As a final point, I'd like to ask a question. Why is Michigan the hardest hit state in terms of unemployment rates (10%) while Wyoming enjoys the lowest unemployment rate in the country (3%)? The answer lies in the fundamental difference in how income is derived in those two states. Michigan is a manufacturing state, and most of the jobs come from factories and related businesses. Wyoming is a farming state. The farmers there are mostly self-employed and don't rely on someone else to give them a job. So maybe we should draw from that line of thinking and realize that no one is going to hand us our personal bailouts. Self-employment might just be the ticket, though.
The most serious financial crisis in 75 years requires us to go back to our roots. As recently as a century or 2 ago, most people were self-employed. We might not have to get back to that point, but everyone should have their personal business, whether or not they derive a full-time income out of it. Wyoming's unemployment performance is made possible by the fact that it's hard to lose your job when you're the boss. Look into your talents and abilities to see if there's a potential money-maker, take advantage of a global economy and the power of the Internet to launch your very own personal venture. It's probably the best time to do that.
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