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July 15, 2005

Unemployment rate down

From the Heritage Foundation:

Today’s Employment Situation report from the Labor Department seems like unambiguously positive news across the board: jobs are up, unemployment is down, earnings are up, and the duration of unemployment spells is down. But it contains a real surprise: the unemployment rate keeps trending down below expectations and now stands at 5.0 percent. While conventional wisdom is stuck in the mindset that the U.S. economy is weak, the data continue to say otherwise....

The orthodox view for many decades was that the “natural” rate of unemployment was somewhere between 5.5 and 6.0 percent. The unemployment rate’s descent to the 4-percent range in the late 1990s made many economists skittish about saying exactly what the natural rate is. As a result, you won’t find many economists speculating about whether the current rate is natural or unnatural, but there is no doubt that a 5.0 percent unemployment rate is better than good and a symbol of real economic strength.

First of all, I'm not holding my breath waiting for the MSM to even notice this, let alone report on it. If it goes from 5.0 to 5.0000000001 they'll jump on that and claim Bush is ruining the economy.

Second, I noticed that when unemployment was down in the '90s, service in many places sucked, big time. Fast food joints had to actively recruit employees, which means they got a lot of those goof-offs who really didn't want a job, and would have rather been home in their mother's basement playing Doom. What Tim Kane (the author of the article) calls the “natural rate” is in reality the Loser Margin. The percent of otherwise employable Americans, that really don't want to work, and would do about as good a job as a chimpanzee (no offense to hard working chimpanzees, intended)

Another result of lower unemployment is that payroll expenses go up (the need to attract qualified employees requires it) therefore, prices go up. Our society is like a large, living organism. You can't just change one thing, without affecting several others. A systemic approach is needed, but rarely acknowledged when addressing things like unemployment and minimum wage.

See the poor couch potato? He doesn't have a job. Poor couch potato. Let's drag him off the couch against his will and put him in charge of making sure the brakes on your car work. Sure he'll be bored, except when watching the crashes, (“Dude, did you see the body parts flying?!? Frickin' awesum!!”) but he'll be employed. Isn't that so much better?

In other words, there's somewhere around 5% of the American “work force” that you seriously don't want employed.

Posted by Danny Carlton at July 15, 2005 08:52 AM

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