The Compounding Effect of Unemployment in California

Unemployment is a serious cause for concern in the state of California. When people have a hard time finding jobs, the economy is bound to suffer, and the unemployment rate in California is generally about a point higher than it is in the country as a whole. This leads to the people of California struggling to pay their bills, the small business owners across the state struggling to keep their doors open, and the overall economy of the state spiraling out of control.

Consumers Are Struggling to Pay Their Bills

It might seem like common sense, but it is important to remember that any consumers who are not able to find reasonable work are going to have a hard time coming up with what they need to pay their bills. And for people who have recently lost their jobs, this is a very difficult situation to be in as they likely have a number of fixed cost debts in place that they were counting on their previous income to pay for.

As one of the states where unemployment is the highest, the people of California know all too well how hard it can be to struggle with paying their bills. And that is only scratching the surface of the overall impact of unemployment on the state.

Local Business Owners Are Suffering

With so many people out of work across the state of California, many small businesses are having a hard time generating enough revenue to keep their doors open. The math is simple here, if the customers they have always depended on are unemployed, there aren’t going to be anywhere near as many customers.

This lack of revenue coming into our local businesses causes many owners to take on additional levels of debt that they had not originally planned for just to keep their doors open. Many business owners will also take the step of eliminating their own paychecks, effectively making them unemployed as well, even though they continue to show up for work every day and don’t appear on any of the unemployment statistics.

Debt Levels Are Increasing Across the Board

With consumers struggling to find work, and local business owners struggling to find customers, the natural progression is for debt levels to rise among both consumers and business owners. As those debt levels continue to rise, both consumers and business owners will find themselves paying more and more of the income they do have towards servicing those debts.

Eventually, this increasing debt problem will escalate to the point where the consumers are forced to file for bankruptcy and the business owners are forced to close their doors for good. This situation can then become a tough burden for any community to handle.

There is always going to be some level of unemployment in every state across the country, but the way the numbers are trending in the state of California lately is troubling. In order to ensure that debt levels don’t spiral out of control, we need to focus on the root problem of unemployment and see if we can’t get our people back to work.

By | 2017-02-12T14:41:01+00:00 December 9th, 2016|Blog|0 Comments

About the Author:

Graduated from University of Utah - business degree 1990. Served in US Army as an interrogator / linguist, then as a tactical intelligence officer - Military Intelligence 1986-1990. Managed Western US sales operations for NY based collection agency 1990-1992. Founded Direct Recovery Associates, Inc. 1992-present