Unemployment Case
For our business unemployment both hurts and helps our business. First, to understand unemployment, we must distinguish the labor force from the larger population. Only people who are working (employed) or spend some time looking for a job (unemployment) are participants in the labor force. If there is a high number of unemployment this can help us because we have more options for hiring people. This can also hurts our business because the labor force grows every year due to population growth and immigration. This growth increases production possibilities but also necessities continue job creation.
The economy (output) must grow at least as fast as the labor force to keep the unemployment rate from rising. Unemployment implies that we’re producing inside the production possibilities curve rather than on it. Our services and good can fluctuate because of the production possibilities. For our business along with any other we need the economy to grow to make a comfortable income.
Our business strives on our service, for example because we design labels for wine bottles we cannot have macroeconomics loss, if this occurs the output of goods and service will be reduced by unemployment. We know this because Okun’s law suggests that 1 percentage point in unemployment is equivalent to a 2 percentage point decline in output.
The human cost of unemployment includes not only financial losses but social, physical, and psychological costa as well. Knowing this we know that unemployment will put stress on all employees at our business. The stress can hurt the production because if Employees are stressed it has been shown that more mistakes are made which brings less consumer need for our business. Along with stress, the business needs to watch the inflation because the natural rate of unemployment is based on frictional and structural forces, without reference to short-term price (inflation) pressures. Inflation pressures is one of the biggest worries