The stability of the economy rests on the ability to maintain a low unemployment rate and provide a safe, secure workplace. Employees benefit from an enjoyable workplace, and in turn businesses save money. When a solid relationship exists between the individual and her working environment, society benefits overall as well.
William Baumol, author of “Macroeconomics,” explains that the employment rate and economic growth are linked. This is because employment contributes to economic growth: Workers produce valuable goods and services, and in turn receive a wage which they can spend on buying the goods produced. High employment means a greater number of goods can be produced as well. Before the industrial revolution, workers relied only on what they could produce individually. This resulted in a limited number of products for sale, which generally included meat, grains and textiles. As production and employment with a business grows, so too does the variety of goods and services offered. The availability of electronics, various specialty foods, clothing and other retail items is due entirely to the expansion of employment opportunities and an able workforce willing to produce these items.
The workplace also holds great importance in society. Companies strive to create a workplace hospitable to employees for many reasons, primarily to save money. When workers enjoy spending time in the workplace, this in turn reduces employee turnover. Furthermore, businesses enhance and utilize a worker’s skill set when turnover is low: Retraining employees, specifically in highly technical fields, is a costly endeavor. Another benefit of the workplace is ingraining corporate culture, which instills the business’s norms and ethics within workers. A 2010 “Business Insider” article explains how the workplace can also impart positive traits and attitudes, such as being innovative.
The importance of the workplace and employment compel some groups to monitor and change the employment rate. The U.S. government and Federal Reserve manage the employment rate by observing economic indicators, adjusting the interest rate and monitoring GDP. Economic indicators such as retail sales and the unemployment rate reflect a willingness to spend disposable income and the number of job-seeking workers who have not yet found a job. Gregory Mankiw explains in the book, “Essentials of Economics” that by lowering the interest rate, the Federal Reserve allows businesses to grow by permitting access to credit. The U.S. government boosts consumer confidence and employment by offering tax breaks for purchases and creating work programs such as “Teach for America” and census jobs. The government also sets laws regarding the workforce by setting a minimum wage, enforcing overtime laws and implementing mandatory safety standards.
Many companies conduct business abroad. When businesses outsource departments like customer service, textile manufacturing and IT support abroad, these divisions are subject to the employment and workplace laws governing that nation.
Since 2008 Catherine Capozzi has been writing business, finance and economics-related articles from her home in the sunny state of Arizona. She is pursuing a Bachelor of Science in economics from the W.P. Carey School of Business at Arizona State University, which has given her a love of spreadsheets and corporate life.