Unemployment Takes Worldwide Toll

Unemployment rates around the world have soared as the global financial crisis deepens. From the time the recession began in the United States in December of 2007 until the end of 2009, job losses around the world are expected to hit 50 million. The United States alone has already lost 3.6 million jobs. Protests and strikes over lost jobs have arisen in Latvia, Greece, Britain, France, Chile, and Iceland.

Analysts believe that the rising unemployment rate could affect the stability and security of governments around the world. People in eastern European countries, many of which moved from socialist to capitalist economies after the Cold War, are worried that the rise in unemployment might cause the countries to step back from free-market policies. In February, director of national intelligence Dennis Blair told Congress that the financial crisis could lead to instability that would be the biggest security risk to the United States, over terrorism.

By the end of the year, the growth rate of the global economy will reach its lowest point since the Great Depression. Several European countries have offered stimulus plans or bank rescue plans in an effort to ease the financial crisis. But some European countries have been critical of the U.S. economic stimulus. Italy’s finance minister said that the U.S. is simply creating more debt for itself, and that the stimulus package won’t work. The president of the World Bank said that the part of the U.S. stimulus package that encourages companies to use only American products is going to have a negative effect on the economies of the rest of the world.

On February 19, the federal government announced that nearly 5 million Americans were receiving unemployment benefits, and that unemployment was expected to continue to rise in the United States at least through the rest of 2009.

Related Links

• Unemployment Seen Booming Worldwide
  Growth in the global economy has almost stopped, and unemployment is rising throughout the world. The unemployment rates are causing protests and strikes across the globe.
  (Source: UPI, February 15, 2009)
• Recession Vice Tightens on Major Economies
  A survey of 250 economists found that unemployment rates are expected to rise into 2010 as the world falls deeper into a recession than was thought even one month ago.
  (Source: Reuters UK, February 19, 2009)
• Nearly Five Million Americans Drawing Unemployment Benefits
  The U.S. government announced on February 19 that the number of Americans collecting unemployment benefits had reached a record high of nearly five million people.
  (Source: Reuters, February 19, 2009)

Critical Thinking Questions

1. Causes and Effects What led unemployment rates to soar in countries around the world from December of 2007 to the present?
2. Analyze How can high global unemployment rates threaten the security of the United States?
3. Compare and Contrast The current global financial crisis is the worst since the Great Depression. Research President Herbert Hoover’s response to soaring unemployment during the Depression. Compare and contrast it to President Obama’s response to the current crisis.