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Unemployment: Jobs
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Frictional unemployment arises because workers seeking jobs do not find them immediately; while looking for work they are counted as unemployed. Friction in this case refers to the incongruity between the demand for and supply of labor. The amount of frictional unemployment depends on the frequency with which workers change jobs and the time it takes to find new ones. Job changes occur often in the U.S.: A January 1983 survey showed that more than 25 percent of all workers had been with their current employers one year or less. About a quarter of those unemployed at any particular time are employed one month later. This means that a considerable degree of unemployment in the U.S. is frictional and lasts only a short time.
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Some argue one of the main causes of unemployment in a free market economy is that the law of supply and demand is not really applied to the price to be paid for employing people. In situations of falling demand for products and services the wages of all employees, from president to errand boy, are not automatically reduced by the required percentage to make the business viable. Others say that it is the market that determines the wages based on the desirability of the job. The more people qualified and interested in the job, the lower the wages for that job become. Based on this view, the profitability of the company is not a factor in determining whether or not the work is profitable to the employee. People are laid off, because pay reductions would reduce the number of people willing to work a job.
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The New York Times : “Unfortunately, bolstered spending for unemployment benefits and food stamps was ... omitted from the plan, in favor of granting businesses outsized tax writeoffs for new investments. That is a blunder because direct relief spending is a more powerful stimulus than business tax breaks, and is better aimed at the neediest. Worse, short-shrifting the jobless and the poor now virtually guarantees that if the economy continues to deteriorate, policy makers will be forced to provide more relief later, driving up the total cost of the stimulus.” See “Beyond the Stimulus Package,” Editorial, The New York Times, 1/27/08
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Beyond the benefits of controlled inflation, frictional unemployment provides employers a larger applicant pool from which to select employees better suited to the available jobs. The unemployment needed for this purpose may be very small... since it is relatively easy to seek a new job without losing one's current one. And when more jobs are available for fewer workers (lower unemployment), it may allow workers to find the jobs that better fit their tastes, talents, and needs.
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The enactment of various laws aimed at reviving business and industrial activity resulted in a substantial improvement in U.S. economic conditions and a decline in unemployment. Soon after the outbreak of World War II in September 1939, the U.S. government launched a program for expanding and modernizing the national defense system. The program provided industry with a powerful stimulus, and unemployment rapidly declined. After the U.S. entered the war in December 1941, not only was the goal of full employment attained, but a shortage of labor replaced the previous shortage of jobs.
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-- "An individual told me he was allergic to unemployment." -- "One candidate said that we should hire him because he would be a great addition to our softball team." -- "A candidate sang all of her responses to interview questions." -- "One job seeker said he should get the job because he had already applied three times and felt that it was now his turn." -- "One individual said we had nice benefits, which was good because he was going to need to take a lot of leave in the next year." -- "An applicant drafted a press release announcing that we had hired him."
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