The 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 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 of 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, employments may also hurt the economy but positive to the population persons. The first classification is Frictional Unemployment. It is when people quit jobs in pursuit of another. The second is the Seasonal unemployment, which occurs during business cycles. The third is Cyclical Unemployment, caused by the unpredictable force of demand and supply in the labor economy. At depressions, the unemployment rate rises, but drops during the 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 County’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 on education and training. For example, the unemployed persons without a college education are twice as higher than the ones with 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 regional 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 the 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, the unemployment rate represents the number of 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 experiences slight variations in the unemployment rate during the past years, the general condition requires interventions. Policymakers such as investors and academia should invest in developing entrepreneurial skills and business service sector to increase employment.