In developing countries, unemployment is often caused by the urban migration that generally precedes the industrial development needed to employ those migrants. In industrial nations, increases in unemployment are the result of economic slowdowns, recessions, or depressions . In the Great Depression of the 1930s unemployment rose to 25% of the workforce in Germany, Great Britain, and the United States. Similar rates occurred in Greece and Spain, due in part to different causes, during the early 2010s.
In the post–World War II era most of W Europe and Japan generally kept their unemployment levels below 3%, and by the late 1960s the rate in the United States, where there had been far more fluctuation, was down to less than 4%. Since the 1970s, however, worldwide economic changes have generally kept the U.S. unemployment rate above 5%. It was greater than 10% in 1982, the highest rate since 1940, and the rate was considerably higher among nonwhite minorities and the young, approaching 50% among African-American teenagers in urban areas. By 1990 the average unemployment rate had dropped to almost 5%. It fluctuated between 5% and 7% for most of the 1990s but dropped to around 4% by 1999 before a recession (2001) led it to rise to 6.3% in mid-2003. It subsequently dropped to 5% by mid-2005 and hovered between 4.8% and 4.4% for most of 2006–7. By late 2009, however, it had risen to 10.1% as a result of the deepest recession since the early 1980s, and slowly dropped to below 6% by late 2014 and to 5% by late 2015. At the same time, however, many people left the workforce and were not counted in the employment figures. Underemployment and unemployment combined exceeded 17% in 2009, the worst such rate since at least the 1970s and perhaps since the Great Depression.
As Keynesian economics (see Keynes, John Maynard ) gained influence among policymakers, more countries committed themselves to finding ways to approach full employment through government intervention. Governments, in addition to trying to increase employment opportunities by stimulating business, have also taken other measures to deal with the problem. In the United States, the Social Security Act of 1935 and the Employment Act of 1946 represented moves in this direction in Great Britain, labor exchanges were set up and a contributory unemployment insurance system established. Under the Communist economic systems of the Soviet Union and the People's Republic of China, attempts were made to eliminate unemployment by socializing the means of production and distribution and by directing labor into more productive channels, but their governments typically proved unable to reallocate labor appropriately, leading instead to unneeded production or underemployment. The disintegration of the USSR and economic liberalization in China ended such efforts.
See C. A. Greenhalgh, ed., The Causes of Unemployment (1983) D. N. Ashton, Unemployment under Capitalism (1986) J. Hudson, Unemployment after Keynes (1988) L. H. Summers, Understanding Unemployment (1989) R. Vedder and L. Gallaway, Out of Work: Unemployment and Government in 20th Century America (1993).
The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2012, Columbia University Press. All rights reserved.
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