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There's diminishing returns. If you have 15-20% unemployment, it's absolutely critical to get that down because there's lots of good workers who are spinning their wheels AND needing support from the system. From 4 to 3%, you begin to scrape the bottom of available and good workers.
The question mark is what exactly is full employment? Historically, the benchmark was around 5%, but it's been under that for several years now, without the inflation that was predicted. It's also a moving target because it depends on who decides they are part of the labor force, if a person decides they are out of the labor force, they aren't counted. Hence why the rate of jobs kept going up and up and unemployment remained constant in the last several years because more people kept jumping in and deciding they were going to be part of the labor force.
All that says that there isn't really a metric of we need to hit THIS number of employment. But if the rate is high, it indicates problems that do need to be solved. From the recent corona thing, it's pretty clear the numbers just aren't reliable and there isn't a long term trend yet.
To get from 4% down to 3%, I don't think you'd get any votes to implement any program to bring your 4% down further to 3%. It would happen incidentally. If you were dead set on figuring out how that might happen, employers would need to raise offerings to attract people away from jobs in which they are content, then unemployed then back fill the jobs vacated. This is a phenomenon is an example of one way that COULD happen, not an exact science.
For NC, Feb-Apr 1999 boasted a 3.0% unemployment rate, but that was a brief thing and I don't think it was "on purpose" through any concerted efforts, but rather a reflection of a booming manufacturing and local construction economy. We were simply hitting on all cylinders, and then some.
Stock markets are near or at all-time highs despite labor force participation rate at an 50 year low and unemployment at a 70 year high.
So my question is, is it necessary at all to re-employ the 35 million unemployed? It does not seem like their jobs matter and we can do fine without them.
Jesus how do you figure. We just added three trillion to the economy.
So......how are those people suppposed to pay their bills? If they are sitting at home? What do they do when the moratoriums, stimulus and unemployment run out?
Stock markets are near or at all-time highs despite labor force participation rate at an 50 year low and unemployment at a 70 year high.
So my question is, is it necessary at all to re-employ the 35 million unemployed? It does not seem like their jobs matter and we can do fine without them.
What do you want those 35 million people to use for money?
Part of the problem with unemployment, and economics in general, is how to display information both simply AND accurately. For unemployment, there's 6 measures, U1-U6, with U1 being the most narrow, and U6 being the most broad. To get an accurate picture, the news should be displaying all 6 numbers, but that would cause people's head to start hurting and they would stop reading your article cause TMI.
If you look at all 6 and track them, you do get a more accurate reflection of what's happening. Part of the deal recently was U3, the standard one was remaining relatively constant, while U6 was declining because people on the edges were ending up better off.
As ddmk mentioned, it can go lower, but it's not a natural state that persists long. And if people wonder "where's the wage growth then", well, factoring for health care costs and such, wages have gone up, just healthcare has eaten away an invisible chunk of total worker compensation.
To get an accurate picture, the news should be displaying all 6 numbers, but that would cause people's head to start hurting and they would stop reading your article cause TMI.
I think a more general case can be made that even all six indicators and their underlying data don't reflect the state of employment in 2020, even before COVID. There's a heavy center towards "one full time job per person" and everything else is dragged laboriously around to make sense of the real working conditions of a very large number of workers.
Quote:
...factoring for health care costs and such, wages have gone up, just healthcare has eaten away an invisible chunk of total worker compensation.
I'm not sure health coverage cost have affected real wages all that much. Some in reality, yes. More in employer perceptions, yes. But I think the bigger answer is that a shrinking number of major employers simply figured out that they didn't have to pay more, no matter what... again because of the shrinking pool of "real" jobs. When you have crappy service and gig jobs mopping up the excess, it's easy to assume 5% unemployment means something in the traditional sense that it should drive wages up. But the reality is wages have stayed flat because that's all employers have to pay to keep their TO filled.
Living wage is a fantasy unless/until employers have to compete for low skill employees.
Do you see THAT happening anytime soon?
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