Unemployment rate shows the overall performance of the economy. It represents the number of unemployed as a percentage of the labor force. A high percentage indicates a poor performance of the economy. The labor force is the population working and below retirement age employed or unemployed. Data required is the number of unemployed workers over the labor force expressed as a percentage. However, one the total population of the area is irrelevant when calculating the unemployment rate (Tucker 159).
There are various qualitative distinctions in the reasons for the classifications of unemployment. The various forms of employment impact on the economy are different, but not all are negative. However, employment may also hurt the economy but positive to the population persons. The first classification is the Frictional Unemployment. It is when people quit jobs in pursuit of another. The second is the Seasonal unemployment, which is occurs during business cycles. The third is Cyclical Unemployment, caused by unpredictable force of demand and supply in the labor economy. At depressions, the unemployment rate rises, but drops during boom. The fourth classification is structural unemployment. It is involuntary since they need jobs in their field (Tucker 159).
Originally, the Rio Grande Valley was an agricultural-based economy unlike today where it is an international trade area for various business sectors. The valley includes the four southern-most counties of Texas; Hidalgo, Cameron, Star and Willacy (McEachern 20). Between 2005 and 2007, the unemployed rose by 27400; however, during the period Hidalgo Count's unemployment rate at 12% and Cameron County's at 11.9%. However, recently, the rate declined by 1.2% compared to 10.2% in 2013. There are also differences in the unemployment rate based in education and training. For example, the unemployed persons without a college education are twice as higher than the ones with the education (RGV Lead 29). The most at-risk occupations are at a lower skill level such as welding and mechanics which are difficult to find (MCALLEN 11). However, there is a significant increase in employment resulting from the region demographics. For example, as a result of low-income residents and rise in chronic incidences such as diabetes, most of the jobs will be from home health occupations (McEachern 50).
Rio Grande Valley faces a structural form of unemployment. For example, a significant number of the unemployed lack jobs in their area. For example, the increased application of machines results in a decrease in manual jobs. Secondly, there is an increased job for the skilled; however a significant number of unemployed do not have college education for the positions. Recommendation to reduce the unemployment rate is development of entrepreneurial skills, and business service. For example, high school education should incorporate literacy in entrepreneurial skills. As a result, a significant number of persons lacking formal employment would self-employ. Secondly, the valley does not have a well-established business service sector. Development in the sector such as in the field of IT would reduce the unemployment rate (RGV Lead 7).
In conclusion, unemployment rate represents the number of the skilled workforce seeking jobs as a percentage of the labor force. However, the total population of the area is irrelevant when calculating the unemployment rate. The Rio Grande Valley experiences a structural form of unemployment. Even though the region experience slight variations in unemployment rate during the past years, the general condition requires interventions. Policy makers such as investors and academia should invest in developing entrepreneurial skills and business service sector to increase employment.
MCALLEN: Chamber of Commerce "Community Environment Scan" 2011 Web uschamber.com/sites/default/files/legacy/chambers/files/a5%252e1environmentalscanmcallenchamber.pdf June 21, 2014
Rio Grande Valley Lead (RGV Lead). "Linking economic & Academic development in the business of education" 2012 Web rgvlead.com/downloads.shtmlJune 21, 2014
McEachern, William Principles of Economics: Custom edition for South Texas College, third edition. Cengage Learning 2012.
Tucker, Irvin B. Macroeconomics for Today. Mason, OH: South-Western Cengage Learning, 2010. Print.