The purpose of this paper is to analyze the changes in the unemployment rate during the term of President Clinton who concludes his second term in office in the year 2000. This analysis will consist of the following parts: a) factors affecting unemployment rate; (b) relationship of inflation to job growth; and (c) impact of minimum wage on unemployment.
There are numerous factors affecting the job market in the United States: size and education of the work force, technology that replaces workers, industry changes and so on. The major econometric model that is used to determine how jobs are created in the marketplace consists of the following assumptions:
A. To finance growth (and therefore create more jobs) the business needs a healthy economy with low inflation, low taxes, and little regulatory interference.
B. If A occurs, then the business will be able to create new jobs for more workers.
C. The only way B will occur is if there is a trained and skilled workforce available.
D. The only was C will occur is to finance training for that portion of the work force that does not have sufficient skills to take the jobs in B.
The creation of jobs focuses on the interplay and the relationship between all of these assumptions. However, all of these factors can be classified in three broad areas -- labor- market conditions, inflation expectations and supply shocks -- and each has a particular bearing on the job market. It is important to keep in mind throughout this analysis that all statistics and assumptions are based on numerous models used by government economists who analyze the relationship between the number of eligible workers in the work force and the number of jobs available.
These monthly labor reports are issued each month and released by macroeconomic advisers and a survey of these reports show that since 1992, the unemployment rate in the United States has gone from 6.7 percent to 4.5 percent in 1998. ...