Unemployment

This article claims that unemployment is not uniformly distributed. Trying to think like an economist, I read this as saying that people with high value skills are almost fully employed, while people with low value skills are facing huge levels (30% +) of unemployment. This fits with the data that says the economy is growing (we’re producing more goods and services) while unemployment remains stubbornly high. The currently unemployed just wouldn’t contribute that much – or would they?

When the economy is increasing production, someone must be consuming the increasing output. But a healthy chunk of our consumption is funded by unemployment insurance payments and other forms of social welfare payment. That funding is financed by growing government debt. The debt, particularly the prospect of repaying it, dampens growth. Growth is important because growth causes an economy to more fully utilize low value skills.

If it sounds like we’re in a vicious circle, it’s because we are. However well intentioned government actions might be, these actions are prolonging the low utilization of low value skills. But all hope is not lost – we have a vibrant economy that has repeatedly demonstrated a capability of outwitting government and producing prosperity and employment.

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