I read an article where an economist said a small % of unemployment is good for the economy...?
Can someone please explain to me why?
Answer:
I think this is a double edged sword - a small percent of unemployment works into the free market system - if we were at zero unemployment then where would be no competition/replacement employees and the balance of the system would be thrown off. (that is the Social Studies teacher opinion) from a former HR exec - there is a percentage of people who will always be unemployed - work short term and then be out of work again
The idea that all unemployment is a bad thing stems largely from emotional reasons. When we think of the unemployed, we think of single mothers, or down and out factory workers who lost their job to outsourcing. These are, for the most part, illusions.
However, we need to know the definition of unemployment before we can truly figure out how such a thing interacts with our economy. Unemployment means that someone is out of work and seeking work. Paris Hilton isn't actively seeking a job, she would rather be out partying. Do we count her as unemployed? of course not. A person has to be actively seeking a job. However, that does not necessarily mean that job-seekers are a bad thing. A fresh college graduate is unemployed as he walks out the gates of his school. A person who quits the job that makes them unhappy in order to look for a more stimulating job is unemployed.
People change jobs for a number of reasons, and in that process of changing, they are known as unemployed. Even if they left their last job on a tuesday and started their new one on a thursday, they still would have been considered unemployed for the Wednesday. So a small level is acceptable because it means that our economy has mobility. It means that the productive labor pool is in a state of increasing efficiency.
Think about it like this. Certain communist countries boast a near 100% employment rate. That's because it's illegal to leave your job (be it at the mill or at the communal farm.) Which sounds more appetizing to you: being able to change your job at will (which leaves the responsibility of finding one in your hands,) or having the government guarantee you a job, but jails you if you refuse to do it?
I hope this answers your question
You read a bad article. It normal to have an small % of unemployment, but it is not good itself. That % of unemployment might by optimal, i.e. its an outcome of the optimal decision of people. But the % can be anything and it's nonsense to speak about a good small %.
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Answer:
I think this is a double edged sword - a small percent of unemployment works into the free market system - if we were at zero unemployment then where would be no competition/replacement employees and the balance of the system would be thrown off. (that is the Social Studies teacher opinion) from a former HR exec - there is a percentage of people who will always be unemployed - work short term and then be out of work again
The idea that all unemployment is a bad thing stems largely from emotional reasons. When we think of the unemployed, we think of single mothers, or down and out factory workers who lost their job to outsourcing. These are, for the most part, illusions.
However, we need to know the definition of unemployment before we can truly figure out how such a thing interacts with our economy. Unemployment means that someone is out of work and seeking work. Paris Hilton isn't actively seeking a job, she would rather be out partying. Do we count her as unemployed? of course not. A person has to be actively seeking a job. However, that does not necessarily mean that job-seekers are a bad thing. A fresh college graduate is unemployed as he walks out the gates of his school. A person who quits the job that makes them unhappy in order to look for a more stimulating job is unemployed.
People change jobs for a number of reasons, and in that process of changing, they are known as unemployed. Even if they left their last job on a tuesday and started their new one on a thursday, they still would have been considered unemployed for the Wednesday. So a small level is acceptable because it means that our economy has mobility. It means that the productive labor pool is in a state of increasing efficiency.
Think about it like this. Certain communist countries boast a near 100% employment rate. That's because it's illegal to leave your job (be it at the mill or at the communal farm.) Which sounds more appetizing to you: being able to change your job at will (which leaves the responsibility of finding one in your hands,) or having the government guarantee you a job, but jails you if you refuse to do it?
I hope this answers your question
You read a bad article. It normal to have an small % of unemployment, but it is not good itself. That % of unemployment might by optimal, i.e. its an outcome of the optimal decision of people. But the % can be anything and it's nonsense to speak about a good small %.
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