The economic policies of employment can promote economic growth, which is when an economy is growing in output, consumption, and investment. If there is no growth in the economy, companies show a paper profit. Still, there are no actual profits to distribute to shareholders because everyone else has a lower income. Economic growth is measured by the gross domestic product per capita, which shows the average income per person within an economy. The USA has portrayed economic growth in the ways shown below.
When an economy grows, it needs to create new products and services that the people who live in the economy want. These goods and services must be produced at a price to make them affordable. This means that there needs to be increased productivity, which is the amount of output produced in a country divided by all costs involved in creating that output, including wages. The USA has high productivity levels because companies can hire less-skilled workers on low wages and then supply them to a neighboring state with high minimum wage requirements.
2. Limited competition
Within the USA, there are very few big businesses that one can pick a job from because the size of these companies keeps them from hiring low-skilled workers. This means that companies have to write off the high costs that they have to pay for labor when they don’t raise their profit margins. They also have to pay more to use more machinery because they cannot hire more employees with higher salaries. Instead, they outsource jobs overseas in Asia and Eastern Europe, which still have lower wages but cheaper labor costs.
The USA has outsourced a lot of its labor to cheaper countries that don’t have the same minimum wages and often have lower living costs. This means that companies can use low-skilled workers on a minimum wage and then export their products to the USA, where they can sell them at higher prices because of the cost savings. The company has already made a profit by outsourcing jobs, so it doesn’t matter if there is no demand for these products in offshoring countries.
Deflation occurs when the cost of goods and services decreases while prices stay the same. This means that companies can outsource jobs overseas without impacting their profit margins because the price of the goods and services will remain the same, which is called a cost-saving. The US had had deflation since 1975 when there was no inflation because people could not afford to buy anything. After all, it was too expensive.
5. Higher wages and more jobs
The USA should increase the minimum wage and encourage more employees to be hired. This means that companies will have to pay higher wages, but they will be able to employ more new workers to help with the additional costs. They will also have increased demand since there are enough new customers who can afford to buy products and services.
6. Build up human capital
The USA should invest in education and training, which means that the workers will be able to learn new skills instead of just being low-skilled workers. The government needs to invest in new programs that can help people gain knowledge and skills. The government also needs to spend more money on improving the infrastructure of schools and universities because they are necessary to get more people into education and training programs.
7. Jobs programs
The government can run some job-training programs to help unemployed people. The government needs to create a more flexible labor force, which means that education will be more similar to training so that people can learn new skills instead of just busy work. Most government job-training programs have failed because they could not maintain the workers’ motivation to keep learning. The government has also been unable to create a flexible labor force, so it needs more input from employers and social workers to improve these programs.
8. More investment in infrastructure
Infrastructure includes transportation, communication, education, and health. The USA has invested a lot of money into developing its infrastructure but needs to keep it up-to-date to keep the country at the forefront of technology. It is important to have good infrastructure because it makes communication much easier, improves the efficiency of products and services, and helps out low-skilled workers by making them more productive.
9. No long-term unemployment
It is important to get people working again because they need to contribute to the economy. The government needs to provide incentives for employers to hire new workers to help pay for the new workers’ jobless benefits. People who have been out of work for a long time are often less productive, so it’s important to get them working again as soon as possible.
10. Positive effect on income inequality
Income inequality positively affects growth in investment and disposable income. The USA can create more investment opportunities and increase tax revenue. The government needs to create a positive environment for businesses, which means they will be willing to invest in the economy. The government could also increase revenue by collecting taxes from companies that want to invest in the country.
11. Need for constant innovation
The USA needs to stay competitive with other countries, which means that it needs to improve its productivity and infrastructure constantly. This will also help increase the country’s overall level of income. The USA must continue to invest in research and development to improve its productivity and efficiency. The government has already invested a lot into research and development programs. Still, they need to continue investing more money because there are no guarantees that the country will remain competitive. If a country is not competitive, it will be less productive and efficient, which means lower wages for workers.