Economic Article Summary

REAL TIME ECONOMICS 5

Economic:Article Summary

Article:Unemployment Trickles Down to Poorer Workers

Thearticle ‘’Unemployment Trickles Down to Poorer Workers’’ byPedro Da Costa explains how unemployment boils down from the skilledworkforce to semi-skilled and unskilled individuals in the labormarket. The author contends that during an economic downturn, higher-income workers who possess higher education qualifications andexpertise to take up jobs that are below their qualification. Duringsuch durations of economic depression skilled workers climb down theoccupational ladder in order to get a job opportunity withoutdifficulty. In this process, skilled worker occupy job opportunitiesthat were formerly held by low-income workers. As a result,unemployment dribbles down from the upper-occupational workers tothose that are at the bottom of the occupational ladder. Workers withhigher qualification enjoy grand income and suffer less fromvolatility in income.

Theauthor also highlights that the labor market is biased towards thehighly skilled workforce, because they shall be preferred foremployment in low-skill jobs when they apply, to low-skilledaspirant. Therefore, during a slump, a form of employment that isreferred to as ‘trickle down’ unemployment arises, and thisserves to aggravate the already prominent level of income inequality.

Inthis article the author also argues counting the figure of thepopulace who are not employed (commonly referred to as U-3) as aproportion of all the workforce in the labor market is too narrow anddoes not reveal the real factors that crop in the labor market whendepression sets in. Underemployment should also be an importantfactor when gauging the labor market, and unfortunately, many peopleoverlook it. A more comprehensive gauge of the state of labor marketshould encompass all the people in the U-3 in addition to thoseindividuals who work part-time though they would want a full-timejob, and those not looking for a job even if they would like to work.This would give a conclusive feedback on the state of the labormarket and effects of depression.

References

Costa,P. N. (2014, September). Real Time Economics. WallstreetJournal.Retrievedfrom:http://blogs.wsj.com/economics/2014/09/03/unemployment-trickles-down-to-poorer-workers-study-finds/