U.S. Output Gaps and Wage Flexibility

The employer , employee and the economy is really at its worse when unemployment level hits high . From the employers perspective unemployment is costly because it has to pay off the benefits that are mandated by law for laying off the workers such as separation pay before the latter goes unemployed . This would be very costly to an employer who has to lay off a lot of workers at the same time . Also , this means that the employer would not be able to function properly without sufficient workers thus this would mean loss of

revenues for the latter . There is therefore the need to give out huge cash layouts and to sustain the loss of the workers by maximizing the people left in the organization in hopes of still effectively carrying out the needs of the business . On the part of the employee , the fact of unemployment means the incapacity of the latter to have the means to sustain his needs such as food , rent and to pay other bills (Oak , M . Unemployment Causes and Consequences The lack of resources brought about by unemployment resonates to bigger problems and may often lead to the consequence of separation of families . The economy would also suffer because when there is unemployment , people are not willing to spend and this has a huge impact on the flow of money of the country . The workers and employers are often unable to reach agreements because of misunderstanding . One party refuses to give in to the requests...