Unemployment Rate in the Great Depression

History is full of unforgettable events that left a mark in people’s mind for later generations. One example of this is The Great Depression in late 1929 that resulted to extremely high double digit unemployment rate. Although the rich did not really feel the impact of this economic event, many middle to low class citizens suffered the greatest blows which allow them to look at the times very tragic. It had started in the United States, but soon after countries across the globe had felt the trembles of the intensive economic downturn that first began in the US.

It is known that it all started when the stock market crashed on Tuesday, October 29, 1929 when it recorded an enormous loss of US$14 billion; money that huge was lost in one single day. This is why some historians refer to this date as “Black Tuesday”. Consequently, international trade dropped to two-thirds, which later hit individuals tremendously as personal income dropped and inflation took place. Many industries have collapsed such as construction and farming. The unemployment rate within a year after the collapse in the stock market rose to 8.7%. Once a country’s unemployment rate reaches beyond 6% it becomes a serious concern for the government. A healthy economy is evident when the rate is 5%. In the latter years, the unemployment rate never stopped increasing. It reached 15.9% percent in 1931, 23.6% in 1932, and an unprecedented 24.9% in 1933. Indeed, just by looking at the previous figures we can have a clear idea at how 60% of the total population at that time suffered tremendously during the Great Depression.

The Great Depression reduced the availability source of income (jobs) as a result of many trigger factors. The stock market collapsed totally. Many businesses and even the government cut down on expenditures and as a result those businesses could not create jobs for the labor force. Many resorted to alternate jobs like farming and mining. Prices of consumer goods deflated so they can be sold which also meant a reduction in wages.