The article discusses about the reduction in the unemployment rates and how and why it happened. The article outlines that the total number of jobs added during the month of March 2013 are lower than what it was in the first two months and may further fuel the speculation that the weaker unemployment data may force Fed to actually continue to follow the policy of buying the long term bonds in order to stimulate the investment, consumption and hiring. A key reason for this reduction in the number of employed persons is that the larger number of people is leaving the workforce than the number of people actually joining the workforce.
The overall drop in the employment data therefore is considered as relatively shocking as the number of jobs actually grew in the first two months of the year as compared to the month of March. Article further outlined that the increase in the total number of employed persons may not be in accordance with the overall recovery posed by the economy during the previous year. The increase in employment rate was higher than the increase in the gross domestic product of the country.
Citing the reasons for the reduction in the unemployment rates, article suggests that it may be due to unusual cold weather in the country and the budget related politics in Washington. The overall budget cuts and the further push towards the austerity may have further contributed towards the reduction in the rates of employment during the month of March 2013. It is however, critical to note that the employment may not be the direct result of the economic situation as changes in employment rates may be due to certain other factors.
One of the key types of employments is the frictional employment which occurs when workers are actually entering and reentering into the labor market. As the article outlines that the long distance truck drivers have the option to leave one industry and enter into other therefore the slump in the employment rates may be due to this frictional movement of workers in and out of the workforce. Structural unemployment occurs when there is actually a mismatch between the skills of the workers and the overall job requirements of the employers.
As the article outlines that the employers are looking for the employees who are ready to enter into the market and as such there may be relatively low demand for new workers. Structural unemployment may create heavy costs for the economy as the gap between the skills and the job requirements may result into outsourcing or shifting of the jobs from one region to another. This may further increase the overall costs for the workers in the existing workforce. Cyclical unemployment is another type of unemployment which may occur due to changes in production over the business cycle.
The slump in the production in manufacturing sector discussed in the article may be one of the reasons as to why unemployment rates increased during the month of March 2013.