“You are being let go, fired, laid off, or discharged.” These statements can bring fear to almost any employee, but when a business must downsize hundreds of employees across their franchise, how does that affect society? People, businesses, the economy and the government all suffer when jobs are lost.
1.) Spending Power and GDP
When an individual loses their position, the spending power of that person and their family plummets drastically. They would rather save for food, clothes, and other necessities instead of going out and spending money on high-priced goods and services. This, in turn, affects the GDP (Gross Domestic Product), or the amount of goods produced by a country in a given year. Because of this reduction in income, the demand curve shifts and employers must decrease production of goods to maintain their bottom-line.
2.) Psychological Effects
Whena person loses their job and their income, they also risklosingtheir home or theircar. This can be a tremendously difficult situation to handle. People who have been unemployed for months on end often suffer from a poor sense of self-worth, discouragement, and depression. According to Forbes.com, “One in five Americans who have been unemployed for a year or more say that they are or were being treated for depression”. This sort of damage to a person can stick with them, making them less likely to be employed when an opportunity finally does arise.
3.) The Community
The detrimental effects of unemployment do not stop at the employee.Unemployment’s impact spreads out into the very core of a community, like toxic chemicals in a town’s water table. Even when you, yourself are not unemployed, you are still directly affected by your neighbor’s unemployment. Those who become unemployed are much less likely to pay their mortgage, possibly resulting in foreclosure. Creditwritedowns.com states that “When the unemployment rate rises above 9% the correlation between unemployment and foreclosure strengthens.”These vacant homes and properties that fall into disarray will decrease the value of any homes in the surrounding areas. Mass unemployment can turn even the richest community into a poverty stricken street of derelict homes and shuttered businesses.
4.) Government Provisions
When there is a high rate of unemployment, consumers purchase less and therefore pay less in taxes on goods and services. They also pay little or no income tax due to their lack of employment income. This leads to the government having significantly less money to fund services; funding for recreational facilities, construction teams for road maintenance, and educational grants for schools and universities all begin to dry up.
5.) Children and Families
When one member of the family loses income, the entire family must pick up the stress and attempt to compensate for the loss. This is not always easy, and this leads families to have to pick up their things and move, often downsizing or moving to an area in which job prospectives look more promising. The stress this has on the family’s children is often the most dramatic. Children are uprooted from whatever life they lived before and forced to adapt to an unfamiliar place with different lifestyles. Then with the loss of income, children may lose out on a proper education, opportunities to go on outdoor mad max adventures activities with friends, or worse, may be forced into a situation where they cannot pursue education at all.