Jump to content
House Price Crash Forum

A Question For The Economists


Recommended Posts

Ok so my economic qualifications are non existent but I'm confused about something.

Full employment is impossible under a free market system as it leads to a wage/price spiral of inflation, followed by recession. This bit I get.

But what confuses me is the concept that unemployment is good for the economy as it suppresses wages.

Surely it isn't unemployment but competition for jobs that suppresses wages?

Our current system, where many low skilled workers end up becoming 'unemployable' in the eyes of HR departments (even during boom times) effectively prevents them from competing. If you never go to an interview, you can't compete by offering your labour for a lower price.

How exactly are the millions of people in long term unemployment having any effect on wages? Even if they are applying for jobs, no one ever offers them an interview so they can't be affecting salary negotiation.

Surely this must be driving wages up due to the need of having to pay higher taxes to support those without jobs?

Link to post
Share on other sites

Our current system, where many low skilled workers end up becoming 'unemployable' in the eyes of HR departments (even during boom times) effectively prevents them from competing. If you never go to an interview, you can't compete by offering your labour for a lower price.

this group of people represents permanently lost economic output, as well as a cost, and is the sign of a world system in terminal decline.

How exactly are the millions of people in long term unemployment having any effect on wages? Even if they are applying for jobs, no one ever offers them an interview so they can't be affecting salary negotiation.

they do compete, but only at the very low end, so their existence suppresses wages at the very low end of the jobs market. this does have knock on effects.

Surely this must be driving wages up due to the need of having to pay higher taxes to support those without jobs?

no, it drives taxes up, and interest rates down.

Link to post
Share on other sites
  • 1 month later...

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.