Unemployment has reduced to 4.6 percent, which can partly be attributed to improvements in various aspects of the economy. There has been a significant rise in construction work which added more than 20000 jobs, healthcare assistant jobs increased by 35000 while 6300 professional jobs were created. Part of the explanation is that the new jobs only represented one-third of the unemployment reduction. People stopped looking for jobs as they returned to education while others aged out of the workforce.
The under-employment and unemployment level is at 9.3 percent. Some Americans have quit hunting for jobs while others have part-time jobs but are hunting for full-time employment. They are all included in coming up with the figure. While the November wages have gone up by 2.5 percent, the wages reduced by 0.1 percent compared to the same in October. The ability of the American economy to produce goods and service that meet the needs of all Americans will be based on whether Donald Trump’s policy makes available the state of production technology and necessary factors of production. Most of the Americans who left the workforce were whites. The promise by Donald Trump to polish the economy may have immensely contributed to his election win as it pleased White Americans who withdrew from the workforce.
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"How Significant are Job Gains?".
The figure above shows the effects on the economy after the government increased infrastructure investment. The price level increased from year one to year two. To some economists, improving the economy requires strategic improvements on infrastructure investment and reduction of taxes to encourage hiring. His strategy involves an expansion of fiscal policy involving tax cuts and increased government spending. However, this policy fails to consider the fact that tax cuts will result in reduced government revenues. There will be less money to spend on infrastructure and merit goods, which may further lead to low exports and reduced competitive edge.
Incentive-related policies, especially personal income tax, can be used by the government as part of its fiscal policy to change the level of aggregate demand-supply. Economists argue that a change in personal income tax can contribute immensely to aggregate supply and led to higher after-tax incomes. This will later lead to the creation of incentives for Americans to generate more jobs. One way of achieving this effect is by increasing the number of hours per week and raising the number of people looking for jobs. Another useful solution is to increase years worked as people may contribute to unemployment by deciding to retire earlier than necessary. Also, people may reduce the duration of their employment. Additionally, lowering taxes on business profits can raise aggregate demand by motivating investment spending.
According to supply-side economists, tax reduction on firms is a strategic supply-side solution for increasing the level of after-tax profits. This ensures firms have enough resources for investment and for purchasing sophisticated technology needed for research and devilment. All of these effects result in a greater potential for output. However, if the government wants to increase tax revenue, it must put into consideration the PED of the goods to be taxed. Government taxes increase when the price elasticity of demand of the taxed goods increases.
As seen from the figures above, the case of elastic and inelastic demand shows the effects of the tax on goods. In figure (a), taxation on goods leads to a shift of the supply curve upward. The explanation is that for each output level that the enterprise is willing and can supply, it must get a higher original price by the amount of tax. While Americans have not experienced higher wages, they have been able to save and spend more.
