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Auto Industry Effect On Households Essay

1199 words - 5 pages

Auto Industry’s Impact on Households

The automotive industry is an essential piece to the economy of the United States. Currently, there are about 850,000 manufacturing workers and 1.8 million auto dealership workers that are employed in the automotive industry today (Amadeo). This industry was and continues to be negatively impacted by the recession that has plagued our nation’s economy since 2008. Unemployment has been one of the biggest issues in the auto industry, along with the negative impact on the government and firms in the United States. Therefore, I will focus on how households have been impacted by the auto industry recession. This will include how unemployment affects ...view middle of the document...

The area in between the two dots and the equilibrium represents the job shortage that was being faced in the United States automotive industry. The ratio of unemployed workers to job openings in the auto industry was close to 6:1 at some points in 2009. That goes to show how difficult it was to find a job after being laid off from a job in the auto industry and how large the gap was between unemployed workers and job openings.

Although there were hundreds of thousands of households who were impacted by the automotive industry recession, it could have been millions if the United States didn’t loan money to the American auto industry to bail them out of financial troubles. According to a poll administered by CNN’s Peter Hart, “18 million households or 15% of American households would be directly impacted by the auto industry going out of business.” Hart says that this has an equivalent impact on households as having a dozen Hurricane Katrina’s hit the United States from coast to coast. This means that there would be twelve times more households affected by the auto industry going out of business than households affected by Hurricane Katrina. Also, the poll showed that 77% of American households would be impacted at some point in time by the failure of the auto industry. These numbers stress simply stress how important that American auto industry is to the American people as well as the nation’s economy. That is why the government couldn’t use laissez-faire economics, which would let the industry fail on its own and then try to build itself back up again. From the household standpoint, loaning money to the big corporations in the auto industry is positive because it gives these corporations a chance to rebuild and eventually create jobs for those who have been laid off.

There are definitely certain areas that have been impacted by the auto industry recession significantly more than others. The area that was affected most is known as the auto corridor which spans from Michigan down to Tennessee and northern parts of Mississippi and Alabama. The reason that this area was impacted the most was due to the fact that this is where the majority of automotive factories are located in the United States, so this area has a large number of workers who are employed by the automotive industry. Detroit, Michigan is known as the world’s traditional automotive center. Therefore, it should come as no surprise to hear that the city has been struggling severely...

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