Speech Example on Labour Economics

The economy of any country can present prosperous times and at other times the economy can be harsh to its citizens. As a result of this, the economy can be as unpredictable as one day you may be living the American dream and the next day you are on the streets looking for a job. Many families have experienced this in the past years especially the times where the American economy was hard hit by the recession. The same experience is what happened to the Neumanns and the Stanleys. The two families are among the hundreds of families in the United States who saw their American dream disappear in a blink of an eye. The challenges faced by the families during the hard economic times led to different futures for the two families which can be explained by use of economic principles.

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Looking at the situation for the Stanleys and the Neumanns, the recession that hit the US in 1991 proved to be the changing points in their lives. As a result of the recession, the two Milwaukee families found their soul providers out of the job and in search for new ones. All this was due to the change in the structure of the labour market. For Tony Neumann, he lost a well-paying at Briggs & Stratton that paid him $ 18 an hour plus benefits. The same thing happened to Claude Stanley who lost his at AO Smith which used to pay him close to $ 20 an hour plus additional benefit. Both these companies were the heart and soul for many families in Milwaukee.

The recession forced companies to look for alternative measures for survival. These measures resulted in sourcing for cheap labour in Mexico and other non-union states. More than forty thousand workers lost well-paying jobs as a result of market demands. The alternative was to work extra hard for jobs that paid a fraction of what they used to earn. The companies were forced to lay off workers as they could still maintain the same level of Marginal Product of Capital but at a cheaper rate. Substituting the union workers with non-union and cheap labour from Mexico provided the companies with a situation where they could maintain the same level of production with incurring fewer costs.

Looking at what the Stanleys and the Neumanns went through in Milwaukee, they suffered what is known as the income effect and substitution effect. In relation to the income effect, the Stanleys and Neumanns had to spend less than what they were used to. Given that each one of their main providers lost their jobs, they had to spend less to be able to sustain their financial status. Spending less for them meant allocating finances appropriately to more key issues. The same occurs in the substitution effect. purchase items that are regarded as being cheaper than what they were used to. In such times, families may result in working more to have extra income.

In order for us to prevent what happened to Stanleys and Neumanns from happening again, the appropriate measures must be taken. Both the government and the citizens should be responsible for having a contingency to prevent future similar incidents from happening in the future. From the government side, appropriate policies should be in place to ensure that people do not lose their work to cheap labour from outside the US. As for citizens, they should have alternative saving measures so that they are well off when another recession occurs in the future.