Help me understand unemployment

Maybe this is a very naive question, but it seems to me that there should always be more stuff to do. Why isn’t that? What is limiting the amount of work that could be done to improve the country?

I’ve got plenty of stuff for you to do, if you’re willing to work for free.

The money to pay for the work to be done.

I’m boarding on debate here, but one of the reasons we have so many undocumented workers is because we have employers willing to offer substandard (less than federally mandated minimum) wages and no benifits. Most americans refuse to work that cheap (and rightly so) or under those conditions.

It’s not the amount that can be done, it’s the lack of demand for it to be done. There is not even a lack of money to pay for it, just the perception that its not worth paying for.

When tight times toughen the easiest thing to cut is payroll. In every state I’ve worked in you HAVE TO MEET payroll. This is the law.

You can stall creditors, after all they have an interest in seeing you don’t go bankrupt, but if you don’t meet payroll this is a HUGE, HUGE deal.

So the easiest thing to do is cut payroll.

Second people don’t always work as hard as they able to. This is not a bad thing. If we walked in, sat down and for 8 hours a day did nothing but work, the stess would take it’s toll.

Here’s the thing, the economy didn’t always suck. So maybe 3 years ago, I said, "If you want this job you have to do “XYZ.” Here’s the thing now, in times of good employment the person will say, “Well for the money you pay that’s too much work. I’ll go elsewhere.”

And let’s say this happens repeatedly. So now you divide the job duties into two jobs. “OK so you have two people working.” You have to do this because it’s a job seekers market.

OK we’re up to today. Now you look at your payroll and cut one of the jobs and assign the duties of the two people to one. That person knows if he quits because it’s too much he will be hard pressed to find another job. So he wears it for awhile.

So you see in the above example, the second person was so called “deadwood” but it was necessary because when the scales are tipped to a job seeker, they can be choosey.

Illegal immigrants are not as much as a problem as people think. Basically as they take jobs that are illegeal. Employers hire them to abuse them. If an employer wants to pay me $3.00/hr for a 12 hour day, no overtime, he’s not gonna ever consider a legal worker. Why? Because I can report him. An illegal can report him, but won’t.

So it’s not that Americans refuse those jobs, they don’t get them offered in the first place.

Basically there is always stuff to do but employers have to meet payroll so they hold off. They combine jobs. Workers who normally would walk away from jobs that require too much stay with them.

Another part is banks aren’t lending. This is a HUGE problem for small businesses. It caused me to close my own part time business. I also worked for a small business and part of the nature of it was we had uneven cash flow. We’d make tons of money in the winter and not so much in the summer. If we coudn’t meet payroll for the week, the bank would extend us a “payroll loan” for a month. And by that time we were OK

Of course could simply put extra cash in the bank, but from a traditional business model it wasn’t worth it as we could be putting that money to work for us in other area. Like hiring more people to bring in more business.

In other words, the people who might pay you for work have to be convinced that they’ll make even more money in profit if they do.

Some unemployment (called “structural unemployment”) is considered normal, and is part of normal movement of people between jobs and industries. If an employee finds a better job and leaves his current employer, then the employer has to advertise and interview to replace that person. Therefore, the job remains empty for a while, even if there are plenty of people interested in it. Only rarely can an employer line up someone new just as the old person leaves. In fact, even in the current economy, there are industries (like nursing) that say they can’t find enough qualified people to fill the positions they have open.

Otherwise, it’s pretty much what people are saying. In my business, I’m only going to hire an employee if I think I can bill three times their salary to clients. So a job with a $35,000 salary should bring in about $100,000 in revenue. But if I’m struggling to find that much work (say, because all my construction clients are out of work) then I’m not going to hire.

Furthermore, unemployment laws actually make me more hesitant to hire. If I hire someone new and realize three months later that the workload no longer requires them, the state sticks me with a big bill and higher unemployment rates. I’m only going to hire when I’m sure I have steady and ongoing work for a new person. In the meantime, I’ll drop clients, extend due dates and maybe do a little overtime with the people I have. This is going on all over the economy. (You can see it in the increase productivity numbers).

A lot (most?) of “undocumented workers” are paid market rate wages, using false identities. There is a question of whether the market rate would be higher without them (due to less labor supply), about the same (given that there’s a lot of money that isn’t even going to workers now, & the forces that make it so may be more powerful than the labor market), or lower (due to even more offshoring & maquiladoras). Probably higher; but that’s hardly “illegals working under the table.”

The most effective corrective to low wages, if historical patterns hold, may be labor organization & collective bargaining. But some people think the unions succeeded partly for external reasons, due to other countries not having the same quality of educated workforce, making First World laborers valuable enough to dictate compensation. So they would take a dim view of the ability of labor unions to accomplish much in the present capitalist system. Oddly, these groups apparently don’t see that as a reason to overthrow the present capitalist system.

Precisely. (although the profit isn’t necessarily monetary)

I would slightly disagree with this. Many American’s would love to have some of those jobs but businesses find that they can save money by exploiting people who are in the country illegally. While the undocumented workers may find that the wages are not too bad relative to what they could get at home that doesn’t mean that the businesses shouldn’t have to pay fair wages and, if they did, Americans would be taking those jobs.

As for the OP. People need to get paid when they work, so they can live. When times are tough we all grip our money a little tighter - I’m not hiring an electrician to do some work I had planned, for example - and that means people are employed less.

It sounds like you are suggesting that the government just create more jobs, stuff that needs doing. No question this is lots of stuff that needs doing but we’ve tried government work programs in the past, with mixed results I would say. We can’t all work for the government and still call ourselves a democracy

It’s only a problem if you think “low wages” is a problem that needs to be fixed. You call it “low wages”. I call it “cheap goods”.

I would append that sometimes there is a mismatch between the skills being demanded from the marketplace and the skills offered by the unemployed.

E.g. If I’m looking for an experienced rocket scientist, it doesn’t matter how many people are in the unemployed pool if none of them are rocket scientists. I’m going to have to hire one away from an existing businesses.

(Though technically this falls into the category of not willing to pay the exhorbitant cost of putting together a dramatic training montage to turn a high school dropout into a rocket scientist in a week).

Yeah, what is being supplied has to match what is being demanded. In the current conditions, supply and demand neatly explains the situation. jjimm mentioned a lack of money, but it looks like there is plenty of money, and not enough demand to spend it on the available supply of labor. I guess the value of money is a factor in there though, since the value is just a perception.

I’m really not suggesting anything, just trying to get an intuitive sense of the situation out of curiosity. So out of all those people who are unemployed, there is no demand for any of their skills at all? Or is it that they would not be willing to work for the market price or that the market price is below the minimum wage or something?

Also, sometimes in third world countries like half the people are unemployed. I’m just wondering how that happens. Like… it just doesn’t make sense to me that there is nothing for them to do.

Well, okay, so you have all these idle people sitting around. Let’s say they could all be hired to build structures. But someone has to want a structure enough to pay for it. If no one is investing in a particular country - no one wants to put a factory there, etc. - then no money flows in, and everything stagnates.

But the unemployed people themselves want stuff, because they have no income.

There are different kinds of unemployment.

“Frictional unemployment” is basically people transitioning between jobs trying to find a match between their skills and interests and someone elses need to get something done. It is caused by less than perfect information about the job market and people’s skills. For example, I am an unemployed MBA. Somewhere out there may be some corporation or consulting firm looking for a mid level manager. The trick is trying to get us together. I’m not going to go wait tables or work in a Starbucks because that’s not where my skills or interests lie. It would probably take me about as long to find a low level service job anyway so it makes more sense for me to focus my energies on a career job.

“Structural unemployment” is a result of fundamental changes to the economy. For example, people who have jobs in industries that have been outsourced, replaced by robots or are otherwise obsolete. Those are people who need to retrain as those jobs aren’t coming back.

“Cyclical unemployment” would be due to seasonal fluctuations in a particular industry like farming or construction.

There may be others I can’t think of off the top of my head.

The production of stuff requires more than a desire for it. You have to have the capital to produce it (that’s what capitalism is - private ownership of the means of production, but even a socialist or communist society - government/communal ownership of the means of production - might have unemployed people because they simply aren’t needed to produce the goods demanded by the economy).

Even subsistence farming (what most unemployed third-world people are doing) requires capital - land, irrigation, seed, tools and some farming skills. Most people in the US don’t have that.

It’s not cheap if I can’t afford it.