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 | | From: | zerge at hotmail.com | | Subject: | Can economic growth initially increase unemployment? | | Date: | 21 Jan 2005 08:15:55 -0800 |
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 | 1.- The economy expands
2.- The demand curve for workers goes up, increasing salaries.
3.- Workers see plenty of attractive opportunities out there so they
quit to search for better jobs
4.- The number of volunatirly unemployed goes up (frictional
unemployment)
5.- Thus, the unemployment numbers go up temporarily, but eventually
lower.
Is this assumption correct or incorrect?
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| | From: | The Trucker | | Subject: | Re: Can economic growth initially increase unemployment? | | Date: | Fri, 21 Jan 2005 21:02:34 -0800 |
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| zerge@hotmail.com wrote:
> 1.- The economy expands
> 2.- The demand curve for workers goes up, increasing salaries.
> 3.- Workers see plenty of attractive opportunities out there so they
> quit to search for better jobs
> 4.- The number of volunatirly unemployed goes up (frictional
> unemployment)
> 5.- Thus, the unemployment numbers go up temporarily, but eventually
> lower.
>
> Is this assumption correct or incorrect?
Workers do not normally quit their present job to "look" for another.
There is already too much cost associated with switching jobs without
compounding the problem with taking time off. This is most especially
true when employer supplied health insurance is considered. Employees
make sure they have the better job before quiting the old one. They
have to consider the deductible periods and such for the health care
because they will eat that as they try to change jobs. In many
new jobs the new employee is not covered for some period of time and
that makes a major out of pocket expense for "cobra". And then they
are at risk and taking a big chance that the new job will work out
for them and the new employer.
The best thing that could happen for US workers would be to outlaw
employer sponsored or employer supplied group health insurance. The
current system is just a hook in the ass of every worker that can
prevent him from moving to a better job. Employers should not be
involved in health care.
--
"I know no safe depository of the ultimate powers of society but
the people themselves; and if we think them not enlightened enough
to exercise their control with a wholesome discretion, the remedy
is not to take it from them, but to inform their discretion by
education." - Thomas Jefferson. http://GreaterVoice.org
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| | From: | Igor | | Subject: | Re: Can economic growth initially increase unemployment? | | Date: | Sun, 23 Jan 2005 01:38:23 GMT |
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| zerge@hotmail.com wrote:
> 1.- The economy expands
> 2.- The demand curve for workers goes up, increasing salaries.
> 3.- Workers see plenty of attractive opportunities out there so they
> quit to search for better jobs
> 4.- The number of volunatirly unemployed goes up (frictional
> unemployment)
> 5.- Thus, the unemployment numbers go up temporarily, but eventually
> lower.
>
> Is this assumption correct or incorrect?
>
It is possible. However, point 2 is a little off. You would need people
who did not have jobs deciding to look for a job. So mothers who provide
home child care decide to send the kids to day care or a retiree decides
to take a consulting job. Perhaps some people in a grad program decide
to withdraw and work. In this case employment would be rising while
unemployment is also rising.
Unemployment does not measure employment. It is defined as those without
a job and LOOKING divded by (those with a job + those without a job who
are looking). This tells you the perecentage of people who want a job
and have not found one out of all those want to work. Employment can be
rising, falling, or staying the same while unemployment rises. If a
recession is very bad then unemployment will not tell you the whole
story as people go back to college or give up looking for work, the
unemployment rate will get better. This could mean unemployment rates
fall as a higher percentage of people in the work force have jobs. It
could also be unemployment rises as employment is booming if too many
people decide to get back into job hunts.
Unemployment statistics are far from perfect. There are a useful tool
but take them with a grain of salt and also look at other statistics
before deciding how the economy is doing.
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