Written Assignment Unit 4:

University of the People

BUS 1103 Microeconomics

Dr. Naser Zonozy

2/22/2021
 Written Assignment Unit 4 :

Unemployment and consumer choices are both areas I am familiar with. About a year ago

the company I was at for 16 years shut down my division. I was one of over 800 people affected

by the shutdown. I was unemployed for a while, and I recently am back to work. Going through

the layoff, unemployment, and re-entry into the workforce gives me a firsthand experience with;

how education affects unemployment rates, how consumer income relates to consumer spending,

and how the Covid pandemic affected the job markets and consumer spending.

The U.S. unemployment rate has been on the decline since 2012. It dropped to 3.5% in

2019, then in 2020; the pandemic shut down caused it to rise to 14.8% and is now hovering at 6.3

%( U.S. Bureau of Labor, 2021). The hardest-hit areas are in the hospitality and service

industries. Many of the workers that hold these jobs do not have a continued education

background. Thus supporting the research suggesting the higher the education of an individual,

the less likely they are to be unemployed. As seen in Figure 1, unemployment levels in the U.S.

are continuously increased by the decrease in education.

Figure 1 US unemployment rates by education level, 1992-2020. Reprinted from Unemployment rate in United States from 1992-
2020, by level of education, Statista, 2021. https://www.statista.com/statistics/232942/unemployment-rate-by-level-of-education-in-the-us/
 Even in the pandemic, the theory holds true. Currently, individuals who did not complete

high school have an unemployment rate of 9.1%. For those individuals who completed only high

school, their rates drop to 7.1%. If you obtained your associate's degree, the current rate drops to

5.2%. And at the lowest percentage of 4% unemployment rate, individuals have obtained their

bachelors or higher. The data shows the higher the education, the lower the unemployment rate,

but I believe other factors play into this. According to U.S. Census, only 36% of citizens born in

the U.S. obtain their Bachelor's degree and less for higher (U.S. Census, 2021). From my

perspective, it shows that there are fewer individuals to fill those roles, meaning lower rates of

unemployment. In contrast, 63.7% of the population has an associate or less, which leads to more

competition in those markets.

In the U.S., as in any country, many things cause unemployment. A few examples are;

new technology, job outsourcing, the wage for a job, environmental stimuli, and recessions.

These play a current role in the U.S. unemployment rates, but the most significant contributing

factor is the Covid pandemic. The pandemic has forced many businesses to shut down or close

completely. These jobs are not being replaced because those markets are not allowed to reopen.

Consumers adjust their spending based on their income. When people make money, they

have a choice to spend or save. Americans spend more and save less than in other developed

countries (Wolla & Sullivan, 2017). If they have a pay increase, they are more likely to buy

things that are not essential. But if their wages go down, they make cuts in what they buy. What

consumers buy and when is definitely linked to their income, but other factors cause consumers

to change their choices.

 Consumers aren't always logical. Sometimes we change our minds on a purchase because

of a feeling or intuition. In other cases like the Covid pandemic, people choose not to buy the

new sweater or car because they were working from home and could wear what they wanted.

And that new car could hold off because they were not driving. But it also influenced consumers

to buy things they normally would not. For example, consumers were stuck at home and could

not do what they usually did, so they took up baking things. In turn, it caused a shortage in yeast,

flour, and other baking staples. I found that the pandemic caused me to change my preference on

when to buy something. Instead of waiting until I was almost on something, it would get added

to my list when I opened the last box.

Not only has the pandemic altered the unemployment rates and consumer choices, but it

has also changed the economy as a whole. The hospitality industries had massive losses, while

services that provided home deliveries of goods had significant gains. While consumers thought

more about savings, they ultimately shifted their spending. They are spending more on groceries,

home improvement projects, and activities that can be done at home instead of going out. Even

though the markets have shifted, there has not been enough of a shift to make up for the losses

faced by other industries.

In summary, education levels do have some link to unemployment rates. While the exact

reason may not be completely understood, the data supports the statement. The consumer's

choices are influenced by several logical and illogical factors. Both unemployment rates and

consumer choices affect the economy and the Covid pandemic has affected all three.

Word Count 816

 References

Statista. 2021. Unemployment rate in Untied States from 1992-2020. Statista.

https://www.statista.com/statistics/232942/unemployment-rate-by-level-of-education-in-

the-us/

U.S. Bureau of Labor. 2021. Unemployment rates for persons 25 years old by education

attainment. U.S. Bureau of Labor.

https://www.bls.gov/charts/employment-situation/unemployment-rates-for-persons-25-

years-and-older-by-educational-attainment.ht

US Census, 2021. US Census bureau release new educational attainment data. US Census.

https://www.census.gov/newsroom/press-releases/2020/educational-

attainment.html#:~:text=An%20estimated%2047.4%25%20of%20the,country%20in

%20or%20before%20200

Wolla, S. & Sullivan, J. 2017. Education, income, and wealth. Page One Economics.

https://research.stlouisfed.org/publications/page1-econ/2017/01/03/education-income-

and-wealth/