What the hell! Why is it bad that so many people are working? Especially when you consider that so many of these jobs pay so little. It would appear that the businesses are concerned that they may have to compete for workers by paying a fair wage.
Greenspan want’s to raise interest rates in part to drive up unemployment.
My question is; Whose economy is low unemployment bad for, anyway.
Peace,
mangeorge
I only know two things;
I know what I need to know
And
I know what I want to know
Mangeorge, 2000
The economy is doing good, wages go up and employers pass the cost onto consumers.
Sounds like capitalism to me. Isn’t this the way it is suppose to work? Or are we suppose to except the fact that people doing menial jobs at minimum wage or less (waitresses)
do not deserve a living wage and insurance?
Ursa summed it up reasonably well. Really, mangeorge, phrasing it as “Greenspan wants to raise interest rates in part to drive up unemployment” is a pretty unfocussed view. Nobody, Republican, Democrat or whatever (a few of those on the loose these days) wants to kill off jobs. They’re just worried about the economy going into a frenzy and having inflation kick in. And, they’re working with old models in a new world. The economic expansion we’ve seen dates its beginnings to the early 1980’s and this past decade has seen a few less than timid policy makers (Greenspan included) cast a vote for seeing where we can go, but not without hanging on to vestiges of old models until we have new ones we trust.
Just playing devil’s advocate, Jaydabee. I’m all for raising the minimum wage to something a person can, at least, survive on. Who cares if a Big Mac is 4 bucks?
I was just pointing out that there are some drawbacks to having low unemployment. (However, none that outweigh the benifits, IMO.)
I think this one will slip toward GD pretty quickly, but I’ll drop my pair of pennies anyhow.
Basic study of economics in a democracy yields the fact that there is an ‘optimum’ unemployment rate. (We’re talking ECON 0101 here, your basic macroeconomics.) In this country, under the present circumstances, 0% unemployment would be disaster. (It’s also impossible; there will always be the ‘transient’ factor.) 10% unemployment would be, if not disaster, then a harbinger of disaster. The happy medium lies somewhere between, and is generally said to be some value between three and six percent, depending on the economist who’s making it up.
As I write this – and as you read this – Alan Greenspan is arguably the most powerful man in the world. Willie will tell you that he and his pals have wrought the amazing economic engine that the 90’s have been, but he’s just blowing the usual cigar smoke; Willie had NOTHING to do with it. In fact, Willie has taken steps to RETARD it. (Willie doesn’t know this, but then, Willie doesn’t know much else either…)
Getting to your question, excessively low unemployment overheats the economy, driving up wages and thereby increasing prices for everything. Sure, in the short run, low-dollar workers get a break, but in the long run, once prices catch up with wages, everyone pays.
Greenspan’s philosophy is ‘let it fly, but don’t let it fly too high.’
I don’t know why fortune smiles on some and lets the rest go free…
I work for a manufacturer in Wisconsin, and our very low unemployment (currently less than 3%) is very hard on us. We make injection molded plastic storage products, which means that the basic and most numerous job in our factory is manual and unskilled: people stand at a machine, taking drawers and putting them with frames and dropping it all in a box after labelling it.
That job starts at $7.50 an hour, with a comprehensive benefits package. At that wage, we can’t get literate employees who are able to fill out a palette tag. We had a literacy/math test with fifteen questions on it, that covered singled digit addition and multiplication. We had to drop the requirement from 15 correct answers to twelve in order to get enough warm bodies. The police show up several times a month to remove someone on a warrant. Our absenteeism rate is around 15%, when the national average is less than 3%.
It’s plain that the pool of employables, of which the unemployed are a part, is drawn extremely wide, and includes people who are employable only in principle. After every second shift, there are roaches on the lawn behind the fire door, and sometimes beer cans. We turn away a third of those who apply for failing the drug test.
Those who can’t really hold a job make up probably a quarter of our production staff. Most are good enough that we don’t wish we could fire them. But for a manufacturer to have to employ that many people who would be fired immediately if the unemployment rate were higher means that our labor costs are double what they should be, in overstaffing and low production.
We can’t directly raise our prices, since our market is very competitive. But it certainly influences how we price our product, and our general product line strategy.
Never attribute to an -ism anything more easily explained by common, human stupidity.
hansel;
Does your company have these same problems with your skilled, technical, and managerial staff? People to fill these types of jobs are also in short supply, and I was wondering if your problems should be attributed to labor shortage or something else. For instance, how does $7.50/hr. measure up to the cost of living in your area. Where I live, $12.00/hr. is considered a living wage. Part-time fast food workers get pretty close to what you pay your unskilled workers.
Maybe the executive staff and stockholders could could give up just a little to attract a better labor force? Most companies I know of claim that wages reflect the value of the workers to the company. I know, after looking at your profile, that you know that a lousy staff is always the fault of management.
And yes, I do believe you may be exaggerating your woes just a little.
Peace,
mangeorge (Let’s get them bums offa welfare)
A Burger King in Memphis spends $1,500 advertising for (admittedly) minimum wage jobs…gets one job application.
If somebody has to do the work and we ain’t gonna do it…sounds like we’re overdue for a fresh infusion of immigrants.
Actually, folks, the Fed has nothing against low unemployment. Contrary to what some of you seem to think,
unemployment figures are just an indicator of other factors at work in the economy (for example, whenever unemployment rises by 1% or more from the previous year, the economy has been in recession). Moreover, low unemployment figures can actually help to realize the effect the Fed aims to realize by raising interest rates (more on this to follow).
Alan Greenspan is justifiably famous (or infamous) for his aversion to inflation. George Bush commonly aired his tiffs with Greenspan when the Fed refused to lower interest rates or buy treasury bonds (both have the effect of pumping money into the economy, encouraging growth). Currently, however, the Fed’s greatest fear is imminent depression–it is the opinion of the Fed that combined market capitalization is overvalued, and when the bubble bursts, the result can only be an extreme bearish swing.
Another way of looking at it is to regard stocks as a commodity whose prices have been too long on the rise. In this paradigm, Greenspan is attempting to combat inflation in a specific sector of the economy. Higher interest rates lower stock prices because raising the price of borrowing cuts into corporate profits, hinders corporate expansion, and makes other investment vehicles (such as bonds) more attractive.
Ironically, low unemployment figures can forestall the need to increase interest rates. Low unemployment is regarded by investors as so much corporate bloat–stockholders like for the companies they own to be lean and mean (with short periods of expansion thrown in)–and results in lowered stock prices.
In short, what the Fed wants to accomplish is to gently bring overvalued stocks down to earth. Low unemployment is but an indicator of overheated expansion and is not the target of attempts to bring expansion down to realistic levels. Quite the opposite is true: low unemployment figures actually help to lower stock prices, attenuating the need for the Fed to employ other tactics to achieve that end.
Hansel;
I just thought of something. I have the solution to your ills.
Try this;
Say you have 100 workers
100x$7.50/hr. = $750/hr.
$750/hr.x2 (your multiplier) = $1,500/hr.
Fire 25% workforce (your’s, again), leaving 75.
$1,500/hr. / 75 remaining crew = $20/hr.
Result;
Savings in hourly wage cost = $0/hr.
Savings in benefits cost = 25%
New, leaner work force, and dedicated to the success of your company.
Maybe a little OT, but what the hey, take that out of the benefits savings.
You’re welcome.
Peace,
mangeorge (Sow’s ear into silk purse, always)
There is no cause-and-effect relationship between low unemployment and an inflationary economy. Low unemployment is but a symptom of overheated expansion, and as such, requires no combating. It is over-expansion which is commonly controlled by raising interest rates.
Uhh, nope. A recession is defined as two consecutive quarters of negative growth in the GNP. High unemploymant rate may help cause a recession, but it has nothing to do with the definition.
??? First I’ve heard of this theory - and my wife is an economist.
Note that in today’s environment, the announcement of Yet Another low unemployment rate does often lead to an immediate drop in stock prices - but that’s because such an announcement increases the likelihood that the Fed will hike interest rates again, and higher interest rates mean lower future corporate profits. “Corporate bloat” has nothing to do with it.
People in Wisconcion being paid only $7.50 for factory work. You can’t even pay your heating bill in Wisconcion for $7.50 an hour. You people deserve to go out of business. Capitilism at WORK!
Dopers with jobs? Afraid you might help the get off of drugs? Help the earn some self respect and responsibilty! Quite acting like they are robots and see them as people and maybe you can improve your comminity!
My sixtey-nine year old mother works in a factory and EARNS $12.00/hour.
WAKE UP corparate america, or go out of business!
We’ve already discussed this one: http://www.straightdope.com/ubb/Forum3/HTML/005444.html
The short answer is that historical data has shown a negative correlation between unemployment and inflation. The reasoning is that when there are not enough unemployed workers in the economy, employers start competing for labor by raising wages. These costs then get passed on to consumers in a couple of different ways, but either way it’s inflation and once inflation gets started it’s hard to stop. Inflation is bad. Very bad.
So jaydabee…I’m sensing you have a problem with capitalism. Would you mandate 100% employment? Mandate every employer has to pay all of his or her employees a ‘living’ wage? This wage is determined by…? And those people who are unemployable get there own living wage from…gov’t? And when everyone in Wisconsin is running around with such and such a wage, you are going to do what to avoid relative price increases? Are you for mandating prices in the market? And where are the price signals going to come from? Who will set those prices?
It is real easy to take potshots at capitalism, but unless you have something rational, coherent and workable to replace it with (or some way of improving on it) you don’t have much to say.
Rhythm…
(Please note: I don’t mean this to be snide or condescending but rather in the most friendliest of gauntlet-throwing terms.)
Once in a while you can get shown the light
in the strangest of places
if you look at it right…
I am very capitalist. You seem to think that capitilism is only for the owners and not the workers. If those people in Wisconcion can not afford to pay those people a living wage (it is called making a living isn’t it?)
then capitalism deems that they be run out of business.
While unemployment is high it works
to the advantage of the employer, they can play workers agaist each. But when unemployment is low the workers can turn the tables on them.
If they pay low wages then the they should not gripe about the quality of thier workforce. Employers seem to think that they can still play the games they did 15 years ago and it pleases me to see them whining about it now when it dosen’t work.
Hello again jaydabee! Didn’t mean to place any extra labels on you (i.e. anti-capitalist) but I get the feeling that you (and many others) have some serious problems with capitalism. This is to be expected, and I am not going to begin to pretend that capitalism is flawless. However, I must say that I believe (though from two short posts it is hardly possible to be sure of anything) that we disagree in exactly where the flaws of capitalism are.
You seem (and again, I am reading into a very limited amount of posts so please forgive me if I mischaracterize) to be under the impression that capitalism is an adversarial system. I would put forth that though it may lend itself to adversarial descriptions, it is in fact merely a distribution system. The seller would like to sell his/her product for the highest amount possible, the purchaser would like to buy the product for as little as possible. The point where the seller is just willing to sell his product and the buyer is just willing to buy the product essentially determines the price of the product. This is true in the apples market just as it is in the labor market. If you are a seller of apples / labor, it makes sense that you want the demand for apples / labor to be high. Conversely, if you are a buyer of apples / labor, you want a large supply of apples / labor to choose from. Capitalism is not ‘for’ anyone.
As for unemployment and the living wage. First, please tell me what a living wage is, how you would have it set, and how you would adjust it to changing economic times. Also, how would you account for the market’s reaction to said wage setting? Lastly on the living wage, how do you prevent unemployment from rising after the imposition of an artificial price on labor?
My final question for now is what do you mean by
Rhythm…
Once in a while you can get shown the light
in the strangest of places
if you look at it right…
Most companies I know of claim that wages reflect the value of the workers to the company. I know, after looking at your profile, that you know that a lousy staff is always the fault of management.
