How does keeping a certain number of people unemployed?

Question

or on low wages/in insecure employment benefit an economy?

Answer 1

I don't think it does. Who said that it did?

Answer 2

Firstly, the idea is not to KEEP a certain number unemployed, but it is a fact that it always happens. A pool of unemployed can be good for the economy as it gives the various employment sectors a labour force to draw on. If there were no unemplopyed, then in all likelihood the country would have to import people to employ.

Also, don't forget that there will always be a certain percentage of people classified as never employable, such as the severely disabled.

Low wage earners don not as such benefit an economy, they benefit the employers. However, the intorduction of a minimum wage, whilst in itself laudable, can also lead to unemployement. This is because in a lot of industries, the West is in severe competition with the emerging economies, particularly of China and India.

There the wages are extremely low in comparison to here and today many firms are already finding it impossible to compete in those product areas where the cost of labour is a large part of the product cost. The inevitable result is that firms in the West cut back on production a or close altogether, which then causes unemployment. Either these firms have to be supported by the government or the minimum wage cannot be intorduced across the board. A real dilema.

Answer 3

Personally, I believe that keeping a certain number of people unemployed is good for an economy.

For example, in the olden days in America, we used to give single mothers something called “welfare.” The state paid these women to stay out of the labor market and raise their children. It was win-win. We also used to pay to support the retarded, the mentally ill, etc.

How does this help an economy? As the supply of workers shrinks, wages go up.

Unemployment benefits do the same thing. In periods of high unemployment, workers tend to accept lower and lower wages. These benefits keep people from getting too desperate.

PLUS, both programs keep money in the economy. Instead of these people living on the street, begging to get by, becoming prostitutes or worse for a few dollars, they were given money to but food, clothing, goods.

This in turn grew the economy.


NOW, low wages and insecure employment hurt economies. That’s what we have now. America’s economy is about to collapse because nobody can live on what they make, so they get easy credit. But the credit supply is running out. Why? The money supply is running out. Pretty much everyone with a household income of less than $100k in America is living paycheck to paycheck to finance debt. There is no discretionary spending. All income goes to debt service, food, and rent. Nobody can afford new cars.

How do car companies stay in business when nobody can afford them? How does any company stay in business if nobody can buy anything?

High wages are the key to a healthy economy. What Americans need now, more than anything, is inflation. Growth. If we all woke up tomorrow and we made twice as much, but also everything was twice as expensive, 99% of Americans would come out ahead. Our debt would be halved.

But we have to support the top 1% and the banks. So no raise for you! Only COAL!

Answer 4

I guess I don't fully understand the context of your question, but I'll give it a shot. Unemployment does not benefit an economy. It is used more as an indicator of the performance of an economy. Obviously, if there are high rates of unemployment, that indicates that there are underlying problems, in which companies are not producing or selling much product. Also, if there is too little unemployment (which periodically happens when an economy is running at full steam), that can cause problems as well as employers may have a hard time finding qualified employees and/or retaining the ones they currently have. A company may choose to go to a place with more unemployment in order to take advantage of a more stable pool of workers, which then derails growth of the economy.

Some groups can benefit from unemployment from time to time. It has more to do with benefiting certain political powers-that-be which benefit from poverty. High unemployment rates tend to make more left-leaning politicians sound appealing. They may vow to create some kind of job program, which may or may not be sustainable.

I guess when we look at it, if you keep wages low, that will spur more exports of goods. China does that. We buy EVERYTHING from them. I mean EVERYTHING. Labor in China costs a fraction of what labor costs in the US, or in much of the rest of the world. By doing this, we have given China lots of dough to buy US Treasury securities. China holds somewhere in the trillions of dollars of US Treasury notes, which we have to pay back someday. That abundant money is what has backed all of our ridiculous mortgages, credit cards and car loans in recent years. So the low wages have in a way enabled China to take a big stranglehold on the US economy. This is part of why the dollar has lost so much value in recent times.

Answer 5

Your question is pretty vague, so I can only give you a vague answer.

If the money supply is tight, consumers will spend less, so there will be less demand for workers. Therefore, companies will layoff some of their workers because the company is not making as much stuff because not as much is being purchased.
To solve this, if the feds raise the money supply, this in some cases has the effect of boosting the economy, making us want to buy more, and making them want to purchase more.

Low wages are helpful because then a company can spend more on making products that are cheaper. But a minimum wage is an important law.

Also, there are always going to be a certain number of people unemployed. This is natural unemployment (there may be a better term for it), but bad unemployment is called cyclical unemployment (if i remember correctly), where we are employing less people because the economy is in recession.

Answer 6

Full employment would mean that the employers would have to pay more wages to attract new workers. That might lead to inflation.
An example from the UK, Eastern Europeans are thought by some to be forcing down wages in many building trades.
I don't know if this is true, but if it is the bosses would like them coming here to work. The native workers would take a different view.

Answer 7

I don't recall the government having a policy of "keeping" people unemployed. When I was in that position I got plenty of help finding a new job, all I had to do was ask for it.

Answer 8

theres something called the phillips curve that says as unemployment increases, inflation decreases and visa versa. also a little unemployment means a competitive fluid market.

Answer 9

It just might be their doing I know this is beyond you mind set But they might have something too do with it Might be that they were socialist or have a worthless degree or spend most of their time putting down an other country or getting into knife fights or come from a family of jail birds Y'all know what I mean "back in the saddle again back were a friend is a Friend" God i don't miss y'all But y'all have a foe for life