Examine the reasons employment levels remained relatively low after the Great Recession.

Question

What will be an ideal response?

Answer 1

The first reason is a higher federal minimum wage. In July of 2009 the Federal minimum wage increased from $6.55 to $7.25. A higher minimum wage means the quantity of labor hours demand by employers decreases. The second possible reason employment did not recover as quickly is due to lower unemployment benefits. In November of 2009 Congress extended the maximum period an unemployed worker could collect unemployment from 26 weeks to 99 weeks. Structural adjustments are another reason for the slow employment recovery. Workers who were employed in the hardest hit areas needed to find new careers. For example, the housing bubble caused many construction workers to lose their jobs. It will take time for these workers to acquire new skills to meet the markets demand. The final reason economists give for the slow recovery is the higher labor costs. The healthcare reform law, specifically the increase in Medicare payroll taxes and the mandatory health insurance coverage (for firms with more than 50 full-time employees) discouraged employers from hiring new or previously-employed workers.