Unemployment vs. Productivity

Discussion in 'Economics' started by DHOHHI, Nov 5, 2009.



    Is it just me or does anyone else think that 9 - 10% unemployment may be the norm in the future?

    The 9.5% productivity gain shows companies are doing more with less. It may allow them to expand their margins. So those who are laid off aren't going to be hired in the forseeable future.

    So does out 'generous' government keep extending unemployments indefinitely to those without jobs? Twenty years ago I worked for GM -- and when union workers were laid off they received 95% of their pay. The governemnt is heading down that same path. Handouts for not working. It's not sustainable. It's real $$$$.

    Further, enough people in the US have had a REAL wake up call regarding finances, losing homes, borrowing from 401K plans to keep afloat, etc. to where they likely won't go back to a "keep up with the Jones" mentality. Thus, significant increases in spending by consumers is hopeful thinking. And if consumers are tight fisted in this regard unemployment stays high making a recovery years and years away.

    Meanwhile we have out of control spending in Washington that may bankrupt the nation in less than 10 years.
  2. classic theory says that 9% - 10% unemployment is a recipe for diaster....

    too many municipal services and budgets will not be paid on that high a number....

    too many demands upon physical and psychological services will escalate on a number that high...

    classical theory also factors into that number the hidden plus / minus 4% unreported unemployed added into that number, such that there would never be sufficient means to track all those who either:

    1) age out of the UIC payments
    2) discouraged and stop reporting
    3) had their skillsets invalidated and hence unemployable in a sustainable manner (i.e. earn enough from whatever jobs they find)

    so, based on reality, we should hope not!
  3. Each generation tries to make a better life for their children, perhaps the Mc Mansion generation is the end of the cycle.

    How much bigger house/yard do you need? Fill the 3 car garages up with crap and then maintain all of this. It's okay but I'm not sure I'd recommend this to my kids or even if my kids want all of this.
  4. Not all jobs are productive. Some jobs have actually been created trough politics as government intervenes in the economy.

    you can pay 5 guys to dig a hole and 5 other to cover the hole back up. Where is the productivity???
  5. Arnie


    9.5% is an outlyer. There is no way that can keep up. They will have to hire, and soon.
  6. I dunno. The REAL unemployment number is closer to 20%. And when "they" have to hire, they'll first look overseas if possible.


    Won't necessarily have to hire. If people are not spending given the wake up call many have received then consumer spending may stay depressed. And corporations can't keep cutting costs. At some point there's not much more to cut. And with 10.2% unemployment that's less $$$ to be spent by consumers.
  8. The outlier is not high unemployment.

    The outlier is the astronomical amount of debt incurred by gov't - fed, state and local, individuals, and corporations.

    That debt these past 30 years fueled the consumption that fueled the job growth - in both consumption based industries and debt based (FIRE economy) industries.

    Yes, high unemployment will be the new norm.

    And another reason: productivity. 70 years ago it took 300 thousand people to produce the same amount of steel it takes about 75 thousand people today. Look at Agriculture - 70 years ago 25% of the population was involved in growing food - today, you only need 2-3%.

    So.... less people needed to produce more things today. What gives? Well, I think the debt we had these past few years covered up an "ailment" of modern society - high unemployment due to productivity. Basicallt, we become victims of our own success.

    That's why I am of the view that the "outlier" isn't high unemployment - the outlier is low unemployment.