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Author Topic: And the main cause of unemployment in Canada is...
Mr. Anonymous
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posted 24 March 2004 05:13 AM      Profile for Mr. Anonymous     Send New Private Message      Edit/Delete Post  Reply With Quote 
adherence to NAIRU theory, or the Non-Accelerating Inflationary Rate of Unemployment.

NAIRU theory - followed by Canada and many other countries - states that a certain percentage of people must remain unemployed in order to keep inflation low. If most of these people are employed, the theory says, they will demand higher wages, driving up prices for the goods and services they buy and consume (ie. inflation). In order to stop this, interest rates are kept at levels that stunt the overall growth of business (and/or ofset the creation of new businesses with the death of others), therefore keeping this certain percentage (around 5-12 percent in Canada) of people unemployed.

Think of this the next time you hear unemployment being blamed on lazyness, presented as a result of global competition, or being mainly a natural state of economic affairs in a modern economy.


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Mr. Magoo
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posted 24 March 2004 12:53 PM      Profile for Mr. Magoo   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Seen this before. How do you, or NAIRU, explain the fact that when I open up a newspaper I see jobs? And that for every job advertised in a paper, there are many more that are advertised by word of mouth, homemade sign, shop bulletin board, etc.? If NAIRU meant that we're all out of jobs, and X% of Canadians didn't get one, that would be one thing... but clearly we have jobs, right now, with nobody filling them.
From: ø¤°`°¤ø,¸_¸,ø¤°`°¤ø,¸_¸,ø¤°°¤ø,¸_¸,ø¤°°¤ø, | Registered: Dec 2002  |  IP: Logged
Michelle
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posted 24 March 2004 12:57 PM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
The above has obviously been written by someone who hasn't had to look for work in a while.

For each job advertised on Charity Village or in the newspaper, there are anywhere from 50-3000 applicants. One person gets the job.

If there are 10,000 people looking at 500 job listings, that doesn't mean that "no one is filling" those jobs. It means that 500 people will fill those jobs, and 9,500 people will still be looking for work.


From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
Mr. Magoo
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posted 24 March 2004 01:18 PM      Profile for Mr. Magoo   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
But then there will be another 500 postings the next day.

When do the jobs run out? When will there be none advertised? Have you ever opened the Want Ads and seen "Sorry... the Jobs section is empty because they've finally all been filled, and no, there won't be any tomorrow either"?


From: ø¤°`°¤ø,¸_¸,ø¤°`°¤ø,¸_¸,ø¤°°¤ø,¸_¸,ø¤°°¤ø, | Registered: Dec 2002  |  IP: Logged
Albireo
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posted 24 March 2004 01:22 PM      Profile for Albireo     Send New Private Message      Edit/Delete Post  Reply With Quote 
[Edited to add that:] Sorry, Magoo, but that is such a crock. You can't just look at job ads and say that there are lots of jobs out there. It only makes sense to compare the available jobs with the number of people seeking those jobs. Michelle is on the right track here. Also, jobs posted in (say) accounting and computer systems are of not much use to the large segment of the population that has no accounting or computer background.


-------------


The idea expressed at top is really just a version of Marx's idea that owners rely on having an army of unemployed at the factory gates to keep the workers in line. With a higher rate of unemployment, you can suppress wages (and therefore inflation), and treat workers as badly as you please. Because if they don't like it, they can easily be replaced. There's a lot of truth in that, in all sectors of the economy. Even if you are (say) a computer programmer or a financial analyst, a high unemployment rate swings the workplace power-balance towards the employer, while a low unemployment rate swings it more in your favour.

I think that those with the most power and money strive to maintain a certain minimum unemployment rate and maximum inflation rate, because those 2 things work strongly in their favour.

[ 24 March 2004: Message edited by: albireo ]


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Michelle
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posted 24 March 2004 01:24 PM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
The jobs don't run out. Neither do the newly unemployed, which you'd know if you walked into an EI office on any given day.

There are always 10,000 people looking at 500 job ads. When the 500 people get those jobs, the other 9,500 people continue to search the next 500 ads, and a new 500 unemployed come along to search with them. If they're lucky, some of the 9,500 left over from last time will get some of the next 500 jobs. And so on and so on and so on.


From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
Albireo
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posted 24 March 2004 01:27 PM      Profile for Albireo     Send New Private Message      Edit/Delete Post  Reply With Quote 
{ Interjection: why is this in the media forum? Wouldn't it be better placed in politics, ideas or even labour & consumption? }

[ 24 March 2004: Message edited by: albireo ]


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Mr. Magoo
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posted 24 March 2004 02:32 PM      Profile for Mr. Magoo   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
There are always 10,000 people looking at 500 job ads. When the 500 people get those jobs, the other 9,500 people continue to search the next 500 ads, and a new 500 unemployed come along to search with them. If they're lucky, some of the 9,500 left over from last time will get some of the next 500 jobs. And so on and so on and so on.

So if I'm one of the 10,000 then I might have to wait through 20 cycles (three weeks) until it's my turn. That's not so bad, job-hunt-wise.

quote:
Also, jobs posted in (say) accounting and computer systems are of not much use to the large segment of the population that has no accounting or computer background.

I suspect that when we're talking about a lack of jobs, we don't really mean a lack of jobs for applicants with a useful skill set, some education or experience and a solid employment history, are we?


From: ø¤°`°¤ø,¸_¸,ø¤°`°¤ø,¸_¸,ø¤°°¤ø,¸_¸,ø¤°°¤ø, | Registered: Dec 2002  |  IP: Logged
Albireo
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posted 24 March 2004 02:48 PM      Profile for Albireo     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Mr. Magoo:
So if I'm one of the 10,000 then I might have to wait through 20 cycles (three weeks) until it's my turn. That's not so bad, job-hunt-wise.
Magoo, in what job market do you get a job when it's "your turn"? If you happen to be in the bottom quartile for job skills, education, experience or "people skills" then it won't be "your turn" for a lot longer than that.

Anyway, is this hijacking of the thread your way of completing the thread title with "...people too lazy to get the many jobs out there", or "imaginary statistics; there are plenty of jobs out there"?


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Stephen Gordon
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posted 24 March 2004 02:52 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
The average duration of unemployment spells is about 3 or 4 months. Your mileage will vary, depending on the state of the business cycle, your skills and where you live.
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Briguy
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posted 24 March 2004 02:54 PM      Profile for Briguy     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
So if I'm one of the 10,000 then I might have to wait through 20 cycles (three weeks) until it's my turn.

Three weeks? Where does that bizarre math come from? It's not like there's a fresh new crop of decent jobs in the paper or HRDC every single day. I'd bet on one cycle per week, generously. Add in some time for the many odd jobs and temp work people take while still looking for a 'real' position.


From: No one is arguing that we should run the space program based on Physics 101. | Registered: Nov 2001  |  IP: Logged
Mr. Magoo
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posted 24 March 2004 03:02 PM      Profile for Mr. Magoo   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
I think all the math in this thread has been simplified some. Plug in whatever values you wish. But if we're talking in terms of "decent" jobs we'd better define that.
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Loony Bin
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posted 24 March 2004 03:09 PM      Profile for Loony Bin   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Magoo, your arrogance and willful disregard for the real difficulty experienced by job seekers is just so bloody frustrating I could choke.
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Mr. Magoo
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posted 24 March 2004 03:16 PM      Profile for Mr. Magoo   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Well don't go doing that.

Unfortunately I've known too many people whose unemployment or undemployment had nothing whatsoever to do with some obscure economic policy. I've never seen NAIRU brought up to explain some unemployment: it's always brought up to explain it all. In other words, "Look at this economic theory! Now you cannot ever hold anyone responsible for their own employment situation ever again!" It's too simplistic an answer to go unchallenged.


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Briguy
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posted 24 March 2004 03:19 PM      Profile for Briguy     Send New Private Message      Edit/Delete Post  Reply With Quote 
Decent job = Full-time work with a livable wage. McJobs do not count (not a livable wage). The many 12-20/hr per week jobs that seemed to litter the HRDC boards ten years ago (my frame of reference) do not count, unless they pay scads'o'cash/hour. It's not really a difficult concept.

[sarcasm alert]
Perhaps the unemployed should be more creative when looking for work? Apparently, writing semi-literate e-mails to the directors of OntarioHydro pays quite handsomely.
[/sarcasm alert]


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Albireo
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posted 24 March 2004 03:20 PM      Profile for Albireo     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Mr. Magoo:
It's too simplistic an answer to go unchallenged.
Magoo, I was thinking the same thing about your own views.

[ 24 March 2004: Message edited by: albireo ]


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Michelle
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posted 24 March 2004 03:23 PM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Sure it has. I was obviously over-simplifying - I didn't know you wanted exact numbers.

But the fact is, the average unemployed person takes, as Oliver Cromwell said, three to four months to find a job, and that's not just people who have outdated skills.

I was shocked last year when I was unemployed for four or five months, with only the occasional two- or three-week temp job once in a while as relief. I have never been unemployed that long - I'm used to going to an interview and getting the job, either on the spot, or that same day. Every job I interviewed for in Toronto when I first came here after getting married, I got.

But last year, despite having six years of experience at my occupation, glowing references, an excellent resume, and pretty good cover letters too, it took forever for me to find something beyond a temp job. And even now, I'm only on contract for a year, which will not be renewed due to it being a maternity leave contract. Furthermore, wages have stagnated in my occupation, and in the temp industry, the wages have gone down.

It is hard to get an interview, but it is even worse when you get an interview and you know you're competing against 5-10 other people who were chosen for interviews, and then to be told when it gets down to the second or third round of interviews that one person edged you out. In fact, for the position I have now, I was their second choice - their first choice backed out. Also, for the position before this one, I was also the second choice (and that was a temp job!) - the first temp they had got a permanent job after working for them for 3 weeks, so they asked for me. At both places they told me I was pretty much as good as the other person, but they had to choose someone, so...

Unemployment doesn't just happen to the unskilled or the lazy. I can't imagine how awful it would have been if my skills hadn't been up to date. I might still be unemployed now.


From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
Loony Bin
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posted 24 March 2004 03:29 PM      Profile for Loony Bin   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
You're just looking at it in terms that are too simplistic, Magoo.

quote:
I've known too many people whose unemployment or undemployment had nothing whatsoever to do with some obscure economic policy.

Well, of course they weren't fired because the employer has to maintain the NAIRU quota, but the reason that they were replaceable, or that they've had so much difficulty finding jobs can be quite reasonably attributed to the fact that there are always going to be more unemployed people than available jobs. And if your friends happen to be people with few or unsufficient job skills, or not a lot of gumption, or whatever, then of course they'll get the crap end of the crap end of the stick, and be unemployed longer than the average job seeker.

The theory explains the nature of the greater employment environment, not the individual circumstances of one person's unemployment. It speaks to the economic dynamics that ensure a ready and willing labour force who are, in general, at a disadvantage when compared to the employers.

[ 24 March 2004: Message edited by: Lizard Breath ]


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Mr. Magoo
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posted 24 March 2004 03:31 PM      Profile for Mr. Magoo   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Magoo, I was thinking the same thing about your own views.

Crazy thought: What if the real truth is somewhere in between the oversimplistic "it's all NAIRU" and the oversimplistic "It's all the individual"?


From: ø¤°`°¤ø,¸_¸,ø¤°`°¤ø,¸_¸,ø¤°°¤ø,¸_¸,ø¤°°¤ø, | Registered: Dec 2002  |  IP: Logged
Stephen Gordon
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posted 24 March 2004 03:34 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
Actually, the theory states that there's a 'natural' level of unemployment that we can't do much about: people leave jobs they hate and try to find something better, people in declining sectors have difficulty transferring to expanding sectors, etc.

If unemployment is below this level, inflation rises. If it stays below this level, it just keeps rising.


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redshift
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posted 24 March 2004 03:38 PM      Profile for redshift     Send New Private Message      Edit/Delete Post  Reply With Quote 
a parochial view-point can be comforting in self-deception regarding the endemic levels of unemployment and under-employment, especially among the marginalized. the truth is a little more disconcerting.
far from a discussion of "decent " jobs, first to disabuse you of your fantasies about the undeserving poor, we should ascertain at what level employment becomes sustainable, or even attractive. as a union organizer, i deal with the inequities inherent within the job market daily.
aboriginal and other people of color, the physically challenged and those whose social circumstance requires more support than a minimum wage part-time "job" offers in remuneration are severely disadvantaged, routinely.
unionization is hampered, demonized and hotly contested by business , because it attempts to address those inequities which limit the ability of employees , or prospective applicants to force the "free" market capitalist model into a "fair" market.
therefore , the system currently in use , if it were truly designed to eliminate the wasted human potential represented by unemployment, would embrace the tools at its disposal, which already exist, to make employment sustainable and attractive to all.
It obviously does not.This, more clearly than any ivory tower intellectual exercise in circular "logic" demonstrates that preserving a pool of available, under-employed labour exerting downward pressure on wages and benefits, is a desirable circumstance for business economics.
and the golden rule prevails.

From: cranbrook,bc | Registered: Oct 2001  |  IP: Logged
clever nickname
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posted 24 March 2004 08:55 PM      Profile for clever nickname     Send New Private Message      Edit/Delete Post  Reply With Quote 
I am pretty bitter about the fact that I will very soon have two degrees, and I'm being told to face months of unemployment or underemployment. And I don't have EI to fall back on, since I've been a student for the past five years. When there aren't enough shitty jobs or "good" jobs, there's a problem.

Part of the problem is that many of the jobs advertised are not enough to get by. Many employers offer positions on contract, or they hire people part-time and have them work *almost* full-time hours. This way they get to avoid paying benefits and giving vacation time, and workers get to have absolutely no job security. It's pretty gross.


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Meowful
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posted 24 March 2004 10:10 PM      Profile for Meowful   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Only 20% of all jobs are ever advertised in the paper. Most of them are in the hidden job market and to access them you have to just get out there and talk to people in your field. Visit different businesses and ask questions.

Clever Nickname, you said that you have two degrees. If I may ask... what field?

Also, did you research the current and projected employment levels in the field you chose?


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DrConway
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posted 24 March 2004 10:26 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
From Linda McQuaig's The Cult of Impotence:

quote:
Although Edmund Phelps, an economist at Columbia University, had developed a similar theory, it was Friedman who had the intellectual and political savvy to sell it within the economics profession. Friedman took the essential concept in the Phillips curve but added a twist that entirely changed its meaning and its practical use. He introduced the concept that there was what he called a "natural rate of unemployment." The natural rate, in his view, was the level of unemployment that was necessary to prevent an increase in the rate of inflation. In other words, the relationship between inflation and unemployment wasn't simply a trade-off that could be adjusted in either direction. The trade-off worked in only one direction: unemployment could be adjusted to serve the goal of controlling inflation.

Friedman argued that there was a "natural rate" of unemployment for every economy, based on a number of factors, and that this natural rate was possible to measure. If an economy could achieve precisely this amount of unemployment, inflation would be held at a stable level. In other words, if the reserve army of the unemployed were exactly the right size, there would be no danger of inflation taking off.

However, it didn't work the other way around, according to Friedman. If a government decided that it was more concerned about fighting unemployment, it couldn't simply decide to allow a little more inflation. This might seem to work; lower interest rates and more government spending might indeed reduce unemployment. But, Friedman warned, this would last for only a short while. Ultimately, these policies would generate an ever-accelerating rate of inflation that would eventually become intolerable. The government would be forced to back down and push unemployment back up to its "natural" level. In the long run, the "natural" rate of unemployment would prevail no matter what governments did. It was simply natural law. Given this reality, governments might as well concentrate on the one thing they could achieve--controlling inflation.


quote:
Now, with Friedman's natural rate theory to back up the classical school, economists could argue instead that the only way to drive down unemployment was to reduce something that came to be called the Non-Accelerating Inflation Rate of Unemployment, or NAIRU. The NAIRU was just a fancier name for Friedman's concept of the natural rate of unemployment, which was just a derivation of classical economics. But the term "NAIRU" sounded highly quantifiable and therefore scientific. Indeed, economists would devote huge amounts of time to discovering the exact level of the NAIRU for any given economy--was it 8.4 percent or 8.9 percent or 7.3 percent? It sounded awesome in its specificity, certainly not something that could be challenged on the grounds of being unfair. It wasn't a question of fairness or unfairness. What was involved here was science.

But what did it all mean? In practical terms, it meant quite a lot. Friedman had subtly adjusted the concept of the Phillips curve so that it was no longer about seeking a balance between unemployment and inflation. Instead, controlling inflation was clearly to take precedence. In Friedman's natural rate theory, the goal was to achieve a state in which the inflation rate would not rise. The key to establishing this situation was to find the right or "natural" level of unemployment. Thus, unemployment was not only assigned a lower priority than inflation, it was actually to become a tool, a vehicle, a lever for achieving inflation control. Therefore, the level of unemployment--and remember we're talking about people's lives here--was to be nothing more than a mechanism to be adjusted in the interests of attaining the true goal: inflation control.


Hope this helps.


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Sine Ziegler
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posted 24 March 2004 10:26 PM      Profile for Sine Ziegler     Send New Private Message      Edit/Delete Post  Reply With Quote 
And even when you get a degree ( or two ) and you actually get a decent paying job, it turns out to be shite and you hate it.

I saw a really eye grabbing commercial in TV here in Calgary. It started out talking about how your year starts, and you go to your same boring job every day unsatisfied unhappy and another year passes and you feel as though nothing advances. Then it suggests you can change your life by going to....

Bow Valley College

Bow valley college offers high school diploma's, ESL, the usual junior community college type courses. I thought the commercial was really interesting and hopeful until I saw that it helps only people who have very little education to begin with.


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DrConway
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posted 24 March 2004 10:43 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
PS. An older thread that I found. There's other threads out there as well. That's just one of them.
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Mr. Anonymous
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posted 25 March 2004 02:13 AM      Profile for Mr. Anonymous     Send New Private Message      Edit/Delete Post  Reply With Quote 
Thanks DrConway for that passage. Linda McQuaig is a good source of info on this topic, which she has commented on in a couple of her books.

It is interesting to note that NAIRU projections are often exceeded (ie. more employment than projected) with no noticable effect on inflation, and that Canada's NAIRU projections (via the Bank of Canada, I believe) are consitently higher than that of the U.S. for reasons beyond my comprehension.

An interesting observation: When you hear US business commentators talking about the possibility of "The Fed" raising or lowering interest rates, and what effect this will have on inflation, they are talking about NAIRU theory. Unfortunately, they seldom seem to question (or even explain) the theory too much, and never seem to expound on the part about unemployment.

For what is IMO the main cause of inflation, please see:
http://www.rabble.ca/babble/ultimatebb.cgi?ubb=get_topic&f=3&t=001074 It seems to me that in the long run, nothing else could even come close to causing the inflation of this system, yet this too goes almost entirely unexamined in the media at large.


From: Somewhere out there... Hey, why are you logging my IP address? | Registered: Jan 2004  |  IP: Logged
Rufus Polson
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posted 25 March 2004 03:07 AM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post  Reply With Quote 
Two points. First, Mr. Magoo, has it occurred to you that there are constantly old jobs lost as well as new ones created? Otherwise, unless the population were growing pretty fast which it isn't, we would have reached zero unemployment long ago as successive 500-job lots munched away a little bit more and a little bit more of that 10,000 until there were none left. Obviously that hasn't happened.
Then there's that "average time". There's always going to be people who don't get the luck, don't have the skills, are ugly and shy and don't show well in an interview or whatever, who are going to be on the long end of that average, especially if there are a whole lot of people unemployed at any given time so that employers can be choosey.

Second, on the NAIRU--things to be clear about. It isn't a natural force that keeps unemployment at certain rates, it's a belief that shapes policy. The main policy it results in is one of bumping interest rates whenever unemployment lowers very far, in an attempt to strangle the economy enough that unemployment will rise again, keeping inflation low. Finally, the key and, as far as I know unsubstantiated, assertion behind NAIRU is that not only will inflation be *higher* if unemployment is kept low, it will be accelerating, *ever-increasing*, presumably leading inevitably to the spectre of hyperinflation and people lugging wheelbarrows full of cash to the bakery.
It is my opinion that the truth is far more plausibly that lower unemployment will tend to lead to higher but not necessarily accelerating inflation. And certainly there have been times when the unemployment rate was much lower than it is today, and yet inflation was not accelerating--or even very high.


From: Caithnard College | Registered: Nov 2002  |  IP: Logged
Stephen Gordon
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posted 25 March 2004 08:16 AM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
The debates in the 1970s and early 80s about the role of monetary policy arose because for a reason we didn't understand at the time, the Phillips curve disappeared. Remember 'stagflation'? It was a puzzle because no one had seen high unemployment accompanied with high inflation before.

[ 25 March 2004: Message edited by: Oliver Cromwell ]


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dnuttall
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posted 25 March 2004 09:44 AM      Profile for dnuttall     Send New Private Message      Edit/Delete Post  Reply With Quote 
People hire others when they can sell the time of the employee for more than it costs them to hire them. They pay the minimum that they think they can get away with and not loose the employee to another firm that wants them more. As such, employees are commodities, and the laws of supply and demand apply.

However, this causes a problem, since the training that people get are often unrelated to the skills the employers want to sell. Thus, some people are unemployed if they can't market their own skills.

I have had long periods of unemployment and underemployment. I have also had periods where I was being actively pursued by multiple firms at the same time. From my perspective, the difference has been knowing what I wanted, and illustrating to the prospective employers that knowledge.

It helped, I suspect, that I had researched the job markets, and applied only to the 'exact fit' jobs, rather than the 'pie in the sky', but in all cases, I got the job offer because the employer could see how they could make money off me. They could see because I could show them.

That unemployment is as high as it is, I would think, is due to people not being taught how to market themselves, and how to figure out what they really want to do. I'm still working out the last thing, and I've been out of University for 10 years.

The reasons we are not taught this, I suspect, is because if we knew how to market ourselves, employers would have a much harder time retaining staff, and wages would be higher, and immediate profits would be lower. Of course, if people are able to find the 'ideal fit' jobs, they are less likely to quit and go somewhere else, so the employer is actually much better off hiring the right person for the job, even if they cost more.

On a different tack - Higher wages does not automatically result to inflation. Inflation is caused when the increase in wages exceeds the increase in productivity. Productivity around the world increases at 1.5 to 2% annually (natural limits occur in areas that approach or exceed their carrying capacity, but thats another issue). If economic growth is stimulated to be greater than this, then inflation will match the difference. In Canada, that productivity increase is added to the rate of population growth, since the country has the natural resources to support the consumption we have. So we see a difference between inflation and interest of around 3%-4%.


From: Kanata | Registered: Mar 2004  |  IP: Logged
clever nickname
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posted 25 March 2004 10:21 AM      Profile for clever nickname     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Only 20% of all jobs are ever advertised in the paper. Most of them are in the hidden job market and to access them you have to just get out there and talk to people in your field. Visit different businesses and ask questions.

Clever Nickname, you said that you have two degrees. If I may ask... what field?

Also, did you research the current and projected employment levels in the field you chose?


I am aware that many jobs are not advertised, and I am of course looking for ones that aren't online or in the paper. I just mentioned advertised jobs because of the debate surrounding the number that were added to the classifieds each day vs. the number of people looking.

I'm sure there are also plenty of un-advertised crap jobs as well

And I don't mind you asking--I have a bachelor's degree in media studies, and I will soon (next month!) have a master's degree in journalism. I didn't really research job opportunities in terms of market share and things like that when I started university (which may have been a mistake, I admit). I didn't know what I wanted to be when I grew up when I picked my major at 17, so I went with something intentionally broad that interested me. And I chose journalism because I love it, although it is a very competitive field. I could have gone to college (which has a better employment rate) or chosen a field like engineering, I suppose. Naively, I told myself it didn't matter how much money I made as long as I liked my job

I apologize if I'm being whiny...I do realize that I'm quite lucky to have any degrees, let alone two. And while I'm not sure how "useful" they're going to be, I am proud of the work I did to get them and what I've learned in the process. I just find it very frustrating that young people are told they have to go to university to get a good job and make something of themselves. Then four years later, they move home with massive debt loads. Even basic jobs now ask for a university degree as a requirement. We need to start being more accepting of other paths, and the workforce needs to start reflecting that.


From: London ON | Registered: Oct 2003  |  IP: Logged
Secret Agent Style
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posted 25 March 2004 11:37 AM      Profile for Secret Agent Style        Edit/Delete Post  Reply With Quote 
quote:
Originally posted by dnuttall:
That unemployment is as high as it is, I would think, is due to people not being taught how to market themselves, and how to figure out what they really want to do.

Did you even read anything that has been written in this thread? If the jobs don't exist, all the self-marketing and networking in the universe won't make a lick of a difference. You can save your guidance counsellor lectures for naive high school kids who still live with their parents.

[ 25 March 2004: Message edited by: Andy Social ]


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Meowful
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posted 25 March 2004 11:49 AM      Profile for Meowful   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
I didn't think you were bein' whiny... alot of people don't know about the "hidden" job market.

The other day, I read in the Province that some construction firm is recruiting employees from the states because they can't find anyone here to fill the jobs.
I think this is due to a "shift" in where the employment is...
Currently, hundreds of tradesmen are set to retire and no one is there waiting to fill the positions. We've told our young people for the last 25 years that in order to be successful they have to go to university and get some degree or another. (No, I'm not saying your degrees are worthless, just that there is a changing job market) The market is now flooded with highly educated people with no one to fill the labour jobs. There will be, within the next 5-10 years tons of opportunities for people in positions such as Millwright, planermen, welders, etc. The problem is that the education system is about 10 years behind... and are still encouraging everyone (even those ill-suited) to go to university.
Clever Nickname, I hope you find something in your field. I work in journalism too, NOT!! I just sell the ads that help get your story out to the public!


From: British Columbia | Registered: Jun 2003  |  IP: Logged
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posted 25 March 2004 12:04 PM      Profile for Secret Agent Style        Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Meowful:
There will be, within the next 5-10 years tons of opportunities for people in positions such as Millwright, planermen, welders, etc. The problem is that the education system is about 10 years behind... and are still encouraging everyone (even those ill-suited) to go to university.

That's very true. I've heard that one aspect of this problem is that many young people haven't been able to get into paid apprenticeships in certain trades even if they were qualified.

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redshift
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posted 25 March 2004 12:10 PM      Profile for redshift     Send New Private Message      Edit/Delete Post  Reply With Quote 
an important note on Meowful's post re: the shortage of tradespeople that's related to our discussion. the shortage in many trades is artificially maintained, and in most cases a matter of repeating a partial truth until it becomes accepted as knowledge.
my trade is presently overstocked with young people attempting to finish their apprenticeships at wage rates which discourage ambitious, intelligent people. these rates have been a direct result of labour code changes sponsored and promoted by business.
the iron-workers Meowful mentions are being imported not because of a shortage of qualified people , but because the wage rate offered drastically under-cuts the union and prevailing wage rate for that work.

“The federal government is siding with some contractors to import cheap foreign workers,” said Wayne Peppard, Executive Director of the BC and Yukon Territory Building and Construction Trades Council. “It is completely outrageous that the federal government will permit foreign workers to take our jobs. We’ve got over 200 workers sitting in the Ironworkers Hall,” according to Perley Holmes, Business Manager for Ironworkers Local 97"

http://www.bcbuildingtrades.org/pages/pressreleases.asp?Action=View&ID=44
its a classic case supporting the premise that unemployment is the preferred method of imposing wage roll-backs.


From: cranbrook,bc | Registered: Oct 2001  |  IP: Logged
faith
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posted 25 March 2004 03:53 PM      Profile for faith     Send New Private Message      Edit/Delete Post  Reply With Quote 
In BC the government has further weakened the trades by dismantling the apprenticeship board .
The tradesman used to develop skills through a red seal programme that was a recognized interprovincial standard , now with the new programme which breaks apprenticeships into small parts instead of a whole education and skills training programme trades people may be trapped as they will be undertrained compared to other provinces. There has already been a scandal with falsification of test results in the new programme to make it seem like a workable idea.
Redshift is dead on with the imported workers, the company said they advertised all over BC and Canada for workers. They advertised for workers to do the metal bars that go into concrete in large construction sites. The work is back breaking and the workers last about 10 - 15 years , those that stay in are always crippled up by the work. The wages offered were so far below the norm in both the union and non union sector that workers could not be expected to live on the wages offered. Gold River on Vancouver Island imported workers from India at 10.00 an hour less than Canadian workers could be expected to make while 500 Ironworkers and Boilermakers sat at the hall waiting for work.
The workers from New Delhi were offered 70 day work visas.
There is a concentrated effort to undermine the trades and break the unions which provide training , updating in the field, and bargianing power. There is no labour shortage just a surplus of greed that will willingly undercut Canadian citizens and exploit foreign workers at the same time.

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Meowful
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posted 25 March 2004 04:20 PM      Profile for Meowful   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Importing workers who'll work for a pittance when there are unemployed Canadians is a freakin' CRIME!

Why, there oughta be a law...

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humbleman
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posted 25 March 2004 04:57 PM      Profile for humbleman     Send New Private Message      Edit/Delete Post  Reply With Quote 
You can thank the neo liberals for that little bit of goodness.
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wei-chi
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posted 26 March 2004 02:31 AM      Profile for wei-chi   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
I thought minimum wage caused unemployment.
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Rufus Polson
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posted 26 March 2004 02:46 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by wei-chi:
I thought minimum wage caused unemployment.

Yes, we know you thought that, or would have predicted it. That is because you are ignorant.


From: Caithnard College | Registered: Nov 2002  |  IP: Logged
Stephen Gordon
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posted 26 March 2004 02:54 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
I'd be interested in a good explanation for why minimum wages reduce unemployment.
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dnuttall
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posted 26 March 2004 03:03 PM      Profile for dnuttall     Send New Private Message      Edit/Delete Post  Reply With Quote 
Andy: If there are no jobs being advertised for your skills, but you know that the skills you have are in demand, then sell yourself. If you can't, then you don't know how to market yourself. If your skills are not in demand, then of course there are no jobs. I don't see that there is a third option.

Jobs get listed only if the skills that are in demand are not coming through the door without advertising. Jobs are expensive to list, so most companies are willing to wait to see who shows up. So, go bang on a few doors. My history is 1 interview for 12 resumes without research, 1 in 4 with research. I've been offered the job more than half of the time I've had an interview. Where I work, almost everyone who is granted an interview gets a job. We interview less than 1% of the resume's we get, and we rarely advertise.

Re: minimum wages - a minimum wage prevents absolute exploitation of some people. Insufficiently, but it helps. But I note that most McJobs that are running around min. wage are being managed by people who are making fine profits. So the job is actually worth more, but there is a higher supply of people who can do the job than jobs, so it becomes a buyer's market. The employer can pay however little they wish, since there are lots who would do the job. Thus, setting a much higher minimum wage will reduce the profits the employer will make, and the lowest value jobs may be lost, but the remaining jobs will have higher value - both to the employer and the employee.

So, I would suggest a higher minimum wage would increase worker satisfaction significantly, leading to lower turnover and higher productivity. It doesn't lead to significantly higher unemployment, since the employer needs those jobs done, anyway, to continue selling the product they sell.

Won't happen, of course, since the employers want their profit, and have the political clout ("It will kill jobs") to prevent it, but I'd advocate raising minimum wage to about $10/hr. Yes, that might encourage businesses to move overseas to exploit the poverty of the third world, but whether it's $8/hr or $10, that pressure is still there. Service industries are located where the customer is, and if the spending power of the general population goes up, the services will be in higher demand as well.

[ 26 March 2004: Message edited by: dnuttall ]


From: Kanata | Registered: Mar 2004  |  IP: Logged
DrConway
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posted 26 March 2004 03:53 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Oliver Cromwell:
I'd be interested in a good explanation for why minimum wages reduce unemployment.

I could swear we argued about this before and I pointed out that the minwage = unemployment line of argumentation is a strictly microeconomic viewpoint and further, is a static model of a dynamic situation.

It is to be pointed out that minimum wages were set to begin with because employers were too cheap to pay their workers enough to spend on basic necessities, never mind a light bulb or a cast-iron imprint of one's grandmother.

Now you might argue that in the case where wages were freely adjustable, workers would have moved to other jobs which paid more. Fine, but there are two objections:

1. Today, skills differentials mean that job mobility cannot be taken for granted.
2. If one analyzes the lower-skill, lower-paid jobs in today's world, the wages tend to be substantially the same and thus effectively undifferentiated.

So. Roll back 100 years again. Predominantly low-skill jobs were the norm, so it is to be expected that wages were undifferentiated since labor was undifferentiated.

Thusly, it cannot be realistically argued that said workers could simply migrate to higher-paying jobs because there weren't any.

Today, the problem is that they can't migrate because they have to incur lost wages while upgrading their skill set.

It was also pointed out by me that in the macro model, the minwage props up aggregate demand, and in the end allows for the purchase of enough production for workers to get paid more, and ultimately increase employment to more than offset the impact of the minwage.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Stephen Gordon
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posted 26 March 2004 06:41 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
This is the first time I've seen this come up, so you must be thinking about a debate that took place before my time.

I don't know where you got the notion that the microeconomic argument (wage up -> labour demand down) is only applicable to static models. It generalises to dynamic models as well. BTW, micro theorists would be extremely indignant at any suggestion that they don't understand dynamic models. They do.

And I don't understand the macro argument, either. Where is this increased demand coming from? Fewer workers means less output and (unless there's a big jump in income earned from investments outside Canada) less income.


From: . | Registered: Oct 2003  |  IP: Logged
Rufus Polson
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posted 27 March 2004 05:14 AM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Oliver Cromwell:
I'd be interested in a good explanation for why minimum wages reduce unemployment.

Didn't say they reduced it. They may even, all else being equal, marginally increase it in the short term. But they certainly aren't The Cause, which is what our trollish friend was asserting.

I've run across claims, sometimes accompanied by math, that higher minimum wages ought to increase unemployment markedly in theory. But I've also seen studies which suggest that in practise higher minimum wages have very little impact on unemployment; unfortunately it's been a while and so I can't give you a citation.


From: Caithnard College | Registered: Nov 2002  |  IP: Logged
Stephen Gordon
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posted 27 March 2004 09:27 AM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
You're probably thinking of the famous Card-Kreuger study. It's famous because it's about the only study that doesn't find that an increase in the minimum wage reduces employment.

The reason economists dislike minimum wage laws is that they force the most marginalised workers with the lowest skills out of the job market.

If the policy goal is to provide a minimum level of *income*, then that's best handled through the income tax system.


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jeff house
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posted 27 March 2004 10:50 AM      Profile for jeff house     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
The reason economists dislike minimum wage laws is that they force the most marginalised workers with the lowest skills out of the job market.

If the policy goal is to provide a minimum level of *income*, then that's best handled through the income tax system.


This apparently means that it is ok to hire someone at $2.00 per hour, because then, at least, he or she will be working.

The employer will then be able to require the state, through the income tax system, to insure that the person makes enough to live on.

Since a $2.00 per hour income will never be enough, a tax cut for these people won't do the trick. What is needed are subsidies.

Am I right? And do the people who do not like the minimum wage also favour these subsidies?


From: toronto | Registered: May 2001  |  IP: Logged
Stephen Gordon
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posted 27 March 2004 10:51 AM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
Yes - I was thinking along the lines of tax *credits*. Something like a guaranteed annual income.

[ 27 March 2004: Message edited by: Oliver Cromwell ]


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jeff house
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posted 27 March 2004 11:03 AM      Profile for jeff house     Send New Private Message      Edit/Delete Post  Reply With Quote 
I think therefore, that until there is a guaranteed annual income in Canada, arguments about reducing minimum wage are a non-starter.

When we get a guaranteed annual income, should it be paid for out of the savings and profits of those who refuse to pay a living wage? Or should everyone have to pay for it?


From: toronto | Registered: May 2001  |  IP: Logged
Stephen Gordon
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posted 27 March 2004 12:31 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
Forcing employers of low-wage workers to pay extra taxes would have the same effect as increasing the minimum wage, so that's not the way to go about it. It'd best to run it out of general revenues.
From: . | Registered: Oct 2003  |  IP: Logged
Michelle
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posted 27 March 2004 12:38 PM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Oliver Cromwell:
The reason economists dislike minimum wage laws is that they force the most marginalised workers with the lowest skills out of the job market.

If the policy goal is to provide a minimum level of *income*, then that's best handled through the income tax system.


Oliver, surely you can't be serious! Have you ever worked for minimum wage?

I did, for 4 years. A fat lot of good the income tax system would have done me - I barely paid any tax to begin with! And I was already getting back the little I did pay. And I still could barely survive on it. That was 10 years ago, at $6 an hour. Thank God I started working full time right after the Rae government came in and there were regular (albeit small) increases to the minimum wage, or I would never have gotten a raise!

I'm sorry, but no, the income tax system is NOT the best way to insure minimum income if there is no minimum wage, and employers can pay the most marginalized, low-skill workers a buck an hour.

This idea that higher minimum wages correlate with more unemployment is most likely true; however, higher minimum wages are not the CAUSE of higher unemployment. It is the greed of the people who own businesses and corporations that cause unemployment.

Would it have caused the owner of the bakery major hardship to pay me a buck more per hour? Well, let's see. He may not have been able to afford one of the following things that he owned and yet cried poor when those of us working for starvation wages asked for a raise:

1. His huge house that we could never even DREAM of owning
2. His car
3. His wife's car
4. His SUV
5. His boat
6. His cottage
7. His pool
8. His pick-up truck
9. Whateverthefuck other toys "poor" people like him generally have.

And you know, I don't begrudge him those toys, even though he only had them because his daddy bought a bakery for him. What I begrudge is the fact that he had those things on the back of 20 employees, at least 6 of which were unable to make ends meet because of his greed.

Furthermore, he WOULD have paid us $2.00 an hour had he been able to get away with it. Thank God for minimum wage laws.


From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
Stephen Gordon
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posted 27 March 2004 12:51 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
As I said, I was thinking of tax *credits* that would ensure a certain level of income.

Edited to add: I don't mean tax deductions, because, as you say, they don't pay much in the way of taxes (probably none at all). I'm talking about income support so that people can accept jobs that pay little and still be be able to survive.

[ 27 March 2004: Message edited by: Oliver Cromwell ]


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DrConway
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posted 27 March 2004 12:55 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
The basic idea is that bumping up the minimum wage increases the purchasing power of those people whose incomes are very low, and so who spend a lot of their money rather than save it. This increased purchasing power stimulates increased production (aggregate demand has gone up), which means other employers will wish to hire more people, and so on.

It's all simple AD-AS in the macro model of why minimum wages are not supposed to increase unemployment.

Edit to add:

Besides, why should it be the government's job to maintain the standard of living of people whose bosses are too cheap to pay a proper wage?

Business would only be too happy to throw the cost of that onto government especially if their owners managed to get another tax cut out of it somewhere down the line, negating even the positive effects of increasing transfers of income from the rich to the poor.

More than likely it would simply mean that slightly better-off workers would be paying into the pot for their less better-off fellow workers, which is not my idea of transferring money from those who have much to those who have little.

[ 27 March 2004: Message edited by: DrConway ]


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Michelle
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posted 27 March 2004 12:56 PM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
So basically, you would subsidize my former boss's SUV, cottage, boat, and three-car garage so that he could pay us $2/hour?

Then you'd better be socking it to him big-time in income tax payments and business taxes, because he should damn well have to pay somehow for the labour he's getting rich off of.


From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
Stephen Gordon
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posted 27 March 2004 01:02 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
I don't think employers have that kind of market power; if they did, we'd all be working for minimum wage.

And if workers did have a guaranteed annual income, the only reason why they'd accept a $2/hr job was because they wanted to, not because they had to.


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Michelle
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posted 27 March 2004 01:07 PM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Hmm. Point well-taken. But I have a question.

Let's say there was a guaranteed annual income of, say, $1000 a month, just to pick a round number. (Yeah, I know, I'm dreaming.)

What would stop basic expenses (like rent, food, utilities, etc.) from going through the roof?

For instance, if I make $2,000 a month now, and suddenly there's a $1,000 a month GAI that I get as a base income from the government, then wouldn't my building, which now rents apartments for an average of a thousand a month, figure, "Hey, people will probably pay around a third to half their income toward rent - why don't we make our average rents around $1500 instead?"


From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
Stephen Gordon
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posted 27 March 2004 01:22 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
They might, in the short run. They'd make huge profits, so all of a sudden, it would be profitable to build apartment buildings. An increase in supply means more choice and lower rents.
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Michelle
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posted 27 March 2004 01:23 PM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
Huh. You have an answer for everything!

I'll be bahck.


From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
Stephen Gordon
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posted 27 March 2004 01:39 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
I'll be here
From: . | Registered: Oct 2003  |  IP: Logged
Rufus Polson
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posted 27 March 2004 02:49 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Oliver Cromwell:

And if workers did have a guaranteed annual income, the only reason why they'd accept a $2/hr job was because they wanted to, not because they had to.

In which case they wouldn't. In which case either those jobs would go begging and there would be increased unemployment because of people not accepting marginal jobs (and right wing think-tanks would start screaming bloody murder about welfare dependency). Or there would be a de facto increase of the "minimum wage" to be higher than the guaranteed income, to give people a reason to work--which would, according to you, increase unemployment. Or some combination. While I have nothing necessarily against the idea of a guaranteed annual income, I don't see how it gets around your problem with minimum wages.


From: Caithnard College | Registered: Nov 2002  |  IP: Logged
Stephen Gordon
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posted 27 March 2004 03:10 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
This would indeed be linked in with welfare. Right now, anyone who is on welfare and who wants to work will be faced with an effective marginal tax rate of 100%: any earnings they make from their job would be clawed back by reduced benefits. That means anyone who wants to leave welfare and who doesn't have much in the way of job skills is pretty much trapped.

What they should have is a no-strings-attached GAI, and if people want to try to earn more, they should be allowed to keep a significant portion of their GAI as well as their earnings, so that accepting a job always means an increased income.


From: . | Registered: Oct 2003  |  IP: Logged
Jacob Two-Two
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posted 27 March 2004 04:53 PM      Profile for Jacob Two-Two     Send New Private Message      Edit/Delete Post  Reply With Quote 
Hey, I'm with you all the way, Oliver. The thing is, this is some major outlay of cash you're talking about. Where is it going to come from? Are you willing to raise taxes on the wealthy to finance this?
From: There is but one Gord and Moolah is his profit | Registered: Jan 2002  |  IP: Logged
SHH
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posted 27 March 2004 05:04 PM      Profile for SHH     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
This apparently means that it is ok to hire someone at $2.00 per hour, because then, at least, he or she will be working.

The employer will then be able to require the state, through the income tax system, to insure that the person makes enough to live on.

Since a $2.00 per hour income will never be enough, a tax cut for these people won't do the trick. What is needed are subsidies.

Am I right? And do the people who do not like the minimum wage also favour these subsidies?


Yes, jeff house, I think you are right. The US has a long standing tax subsidy known as the EITC (Earned Income Tax Credit). If you work and make under ~15K and have dependants, you not only don’t pay any income tax, you get ~3K in a tax credit. As in a cash check.

It is very popular among those who know about it. I'm sure many thousands are filing the 1040EZ with out knowing they're leaving thousands on the table.


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Stephen Gordon
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posted 27 March 2004 05:06 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
You know, I don't think it really would be that much more expensive, since it would replace a lot of what goes on in the existing welfare bureaucracy. And it would be much cheaper to administer. Among other things, you don't need an army of inspectors making sure that welfare recipients aren't sneaking off to work.

I can tell you that if the NDP were really interested in this, they'd be surprised at the support they'd receive from academic economists - especially if they actually consulted them in designing their proposal.


From: . | Registered: Oct 2003  |  IP: Logged
Jacob Two-Two
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posted 27 March 2004 07:00 PM      Profile for Jacob Two-Two     Send New Private Message      Edit/Delete Post  Reply With Quote 
Well, sure, but if you dismantle the bureaucracy then tons of people will lose their jobs, driving them onto the GAI.

I'm sure a lot of money would be saved by dispensing with the infrastructure of eligability. I always make this argument myself. But still, I can't imagine that it wouldn't come out to some rather large expenditures, even with the savings. Unless I see some figures that suggest otherwise, I will continue to believe that implimenting the GAI would require a tax hike, and thus would need some serious political will to expand the public sector (which I'm entirely in favour of). As that will doesn't exist, it is a non-starter for the NDP.


From: There is but one Gord and Moolah is his profit | Registered: Jan 2002  |  IP: Logged
Stephen Gordon
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posted 27 March 2004 08:36 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
Clearly, someone has to to do serious homework here to get some idea of the numbers involved. And it should *not* be done by the CCPA. Someone at the NDP should call Dwayne Benjamin at U of T and/or Thomas Lemieux at UBC (that's a very short list; I can think of many others) and ask them for their help. Regardless of their politics, they would take such a request very seriously.

The thing is, I think that it wouldn't be that hard to get the political support necessary. Remember when Harris first got elected? At one point, he found some woman who was earning $40,000 a year (or whatever) and had decided to quit her job and go on welfare, because she would be better off on welfare than working. That struck a cord. The NDP never could come up with a convincing counter-argument, so people got the impression that there was something seriously wrong with how the welfare system was structured.

A GAI would not be vulnerable to such a critique. People would not be penalised for wanting to work.


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DrConway
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posted 27 March 2004 09:36 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
The CCPA, of course, has supported a GAI, if memory serves.

I have no problem with the GAI, in principle, and even in the past advocated it by pointing out precisely that all the social services plus EI/CPP/OAS money could be combined into one big ol' monthly allotment.

Michelle's got a point, though; the temptation to put people through the short-term wringer by drastically raising prices is a possibility, even if in the long run (never mind that in the long run, we're all dead) prices will come back down due to increased supply.

OCromwell: Incidentally, considering that minwages have tended to lag inflation over time, how do you know the inflation-adjusted market-clearing wage isn't above the minimum wage?

Furthemore, the minwage-creates-unemployment argument is treated very simplistically even by economists generally, I've found; They draw a simple supply-demand graph and then plot the points that show the shortage and say "boom. There's unemployment."

Never mind that:

First of all, that supply-demand graph can shift over time,
Second of all, that situation is true for a firm or maybe an industry but certainly not for the economy as a whole, since a country like Canada has a complex, diverse economy that is not concentrated overly much on any one sector,
Third of all, they tend to omit the possibility I just raised earlier - that minimum wages can be below the market-clearing wage.

You also completely ignored the historical basis that I pointed out for a minimum wage, and you chose not to acknowledge the possibility that we tolerate what economic inefficiencies arise in the interest of fairness, since it is an implicit recognition of (something again denied or overlooked by mainstream economists, I've found) the differential power dynamics inherent in an employer-employee relationship.

The employer holds all the cards. He or she knows that for any one job there could well be 100 or 200 applicants. If all the applicants collectively decided to withdraw until the wage came up, that would be one thing.

But in real life, that doesn't happen. Someone will always absolutely need that job.

Ergo, it is recognized in the law that such situations must be corrected to prevent undue power imbalances.

Which of course, opponents of the minimum wage conveniently overlook.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Stephen Gordon
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posted 27 March 2004 10:33 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
If the explanations that you've seen look simplistic, that's because the we don't need a complicated model to make the point. Adding a more complicated structure wouldn't change anything.

None of the three points you raise affect the result. Yes, things change over time. But it's hard to imagine circumstances where a firm will react to an increase in the minimum wage by hiring more workers. And if the effect of an increase in the minimum wage is to decrease (or at best, not increase) employment in each firm, then when we aggregate up to the macroeconomy, total employment must fall (or at best, not increase). The most benign case would be if the market wage in every sector was always above the minimum wage - in which case, we have to ask why it's even necessary to have a minimum wage.

I don't know where you're going with the 'employer holds all the cards' argument. In markets where wages are above the minimum, employers *don't* hold all the cards: the only way they can retain their workers is by paying them more than the minimum wage. And if the minimum wage is binding, firms deal with it by getting rid of workers whose productivity does not justify paying them the minimum wage. Forcing the most marginal of workers out of the labour force seems like a very odd way of correcting the 'power imbalance'.


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Michelle
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posted 28 March 2004 11:05 PM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
This should be in the Labour and Consumption forum. I have no idea what this has to do with "media".
From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
dnuttall
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posted 29 March 2004 10:19 AM      Profile for dnuttall     Send New Private Message      Edit/Delete Post  Reply With Quote 
Lets just say for a moment that some government decides to raise the minimum wage by taxing the rich. Low income earners now have more discressionary spending. High income earners have less. Low income earners spend almost all of their discressionary cash locally - there's not too many people at the poverty line with a chalet in the Alps. High income earners spend much of their cash elsewhere - they do have the chalet, or take vacations to Cancun, or have a winter home in Australia. So for the same number of dollars in the economy, more money is spent locally by low income earners than high income earners. Raising the spending power of low income earners will create more demand for services locally, which will increase employment opportunities. More people spending means more jobs.

Some of that increase in spending power will be spent of imported products, but not all. Some of the increase in demand will be met by third world production. But service industries have to be pretty close to their customers - a sweat shop in Taiwan won't be bagging my groceries.

Some people will loose their jobs as companies have to fold - they can't afford to pay that much to their staff, for whatever reason. The demand will still be there, so other, more efficient and better run companies, will be able to take up the slack, capitalizing on the opportunities presented by the drop in competition. That lack of competition will produce inflation, as supply and demand raises the price of the product. But very soon the system will rebalance.

Governments make far more money off the middle class than off the rich, so they would want more middle class, no? Unfortunately, the purpose of government is to maintain the status quo so the existing power structures are maintained, rather than to actively try to increase the quality of life of all citizens equally. Pity.


From: Kanata | Registered: Mar 2004  |  IP: Logged
weakling willy
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posted 30 March 2004 10:16 PM      Profile for weakling willy     Send New Private Message      Edit/Delete Post  Reply With Quote 
It is worth noting that Canada considered a GAI in the 1970s but then backed off. I think the Department of Finance would be too worried about the work disincentive effect. That effect varies, of course, based on the level set for the GAI -- if the level was low, people would still be pushed to work. HOwever, we would then be back to the trouble of what to do with people unable to work due to job scarcity or being unable to work (and then we are back to all the administration seen in existing programs). I'm interested by the idea of the GAI, but I think developing a political constituency for a project taken up both by the left and by the right (Milton Friedman supported the negative income tax, I believe) is difficult, as is overcoming the resistance of Finance ministries.

We are more likely to see elements of GAI come in through the proliferation of income-targetted benefits like the National Child Benefit. However, when one adds all of those together, you end up with pretty high effective marginal tax rates for people earning 20,000-30,000 per year.


From: Home of the Canadian Football Hall of Fame and Museum | Registered: Oct 2002  |  IP: Logged
Stephen Gordon
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posted 30 March 2004 10:38 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
Exactly - that kind of disincentive to even try to work your way out of that income range is one of the most frustrating features of the current system. Once you cross a threshold, you lose *everything*, so unless your new job pays well enough to compensate for the lost benefits, you may as well stay home.
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Mr. Anonymous
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posted 01 April 2004 05:51 AM      Profile for Mr. Anonymous     Send New Private Message      Edit/Delete Post  Reply With Quote 
Nice post, dnuttall. You pretty much covered what I was going to say, except for the following:

- People have a deep need for security, which would be better covered with a (more) full employment policy. Great innovation and happiness could be unleashed if people knew they could hunt for jobs without fear of losing too much wages, seniority, or not liking their new job or having their new job dissapear with devastating results. Perhaps people would be more likely to shop ethically, ie. no need for Wall-Mart and the like, in fact no Wall-Mart as it now exists, as nobody would want to work there with conditions similar to those there today. Perhaps people would buy more Canadian/less sweatshop in general.

- (And someone please verify or disproove this if possible) Didn't Paul Martin approve/run for office on the platform of full employment in his pre-finance minister days?

And please check this tread out if you haven't already: http://www.rabble.ca/babble/ultimatebb.cgi?ubb=get_topic&f=12&t=000461&p=
It covers the real main cause of inflation and why it bodes poorly for the vast majority of Canadians


From: Somewhere out there... Hey, why are you logging my IP address? | Registered: Jan 2004  |  IP: Logged
R. J. Dunnill
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posted 14 April 2004 01:46 PM      Profile for R. J. Dunnill   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
I suspect that when we're talking about a lack of jobs, we don't really mean a lack of jobs for applicants with a useful skill set, some education or experience and a solid employment history, are we?

I'm one of the structurally unemployed, and I have a supposedly useful skill set.

On-topic, I'd say that there are several important contributing factors to high unemployment, and one of them is an artificially high rate of immigration, which keeps the labor supply larger than the pool of jobs.


From: Surrey, B.C. | Registered: Aug 2001  |  IP: Logged
brian brian
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posted 14 April 2004 02:06 PM      Profile for brian brian     Send New Private Message      Edit/Delete Post  Reply With Quote 
The inflation rate is not tied to unemployment levels, it’s tied to the money supply.

A currency's value is based upon the production it represents. When a financial system is honest, there’s no inflation nor deflation. Why does a $4,000 car from 1970 now cost $40,000? Because more currency has been created than the production it represents. Inflation is essentially a tax on the value of a currency, and anyone who uses that currency is paying the “tax”. But the federal government doesn't control how much currency is in circulation, the Bank of Canada does that.

Back in 1970 society agreed that X amount of material plus Y amount of labour equals Z, a $4,000 car. So the Central Bank would “create” $4,000 worth of credit and currency to reflect that. If a car had an average lifespan of 10 years, the Central Bank would divide that $4,000 car by ten and remove $400 in currency a year from circulation. The new $4,000 put into circulation represents new production. The $400 removed from circulation represents consumption. With a financial system like this, there would be no inflation and no deflation, excepting intangibles where drought affects food supply or foreign material costs (oil for example) move up or down.

An auto worker might make five engine blocks in a week. If there were no currency, we’d be operating on a barter system, and that worker might receive one of his five engine blocks as payment for his labours. Since it’s difficult to lug around engine blocks and trade it for food, clothing and shelter, we have money to represent the wealth of that engine block. So the worker takes home his share of work in the form of a paycheque and uses that money to buy his groceries and pay his bills.

But if the Central Bank creates $5,000 worth of currency to reflect that $4,000 car… somewhere out there is an extra thousand to spend. This is the source for inflation. And over time the car’s price moves to 5K, 10K… to 40K where it is today. And the worker who received a $250 paycheque back in 1970 has found that his dollar beer after work became $1.25… then $1.50… then $3.00… he now needs more money to buy the same thing. He's been taxed through the money supply, because his wages will never keep pace with the inflation rate. At best salary levels increase a few years behind the inflation as it occurs, but this still entails a window where the worker’s purchasing power is decreased.

Recessions are caused when currency and credit are intentionally withheld. Inflation occurs when more currency than what’s necessary is put into circulation. This is all intentional, because this is how the Central Bank makes its profit. The Bank of Canada is a private corporation. The shares are held in trust by the Minister of Finance, but it remains a private corporation. It’s actually impossible to pay off all government debt, because the combined debts of all levels of government exceed the existing money supply. Imagine we started over today, wiping out all government debt. The Federal Government (to pick a number out of a hat) needs $100 billion to put into circulation so that the economy can function. The Bank of Canada provides that $100 billion to the Federal Government at say 5% interest. A year goes by, and the debt owing to the Bank of Canada is $100 billion, plus $5 billion in interest charges. Except there’s only $100 billion in existence… the currency to reflect the $5 billion in interest doesn’t exist. The Federal Government uses taxation to pay off the debt to the Bank of Canada, but it’s not going to tax that $100 billion back out of circulation all at once – it will do so over 20 years. So each year the interest charges grow – money that doesn’t exist. The government could borrow new money to reflect the interest charges but the same dilemma applies where tax revenues will take years to recover the funds from the public. After a century of this we end up where we are today – federal income taxes, provincial income taxes, sales taxes, and on and on… taking up a better than 50% of our incomes… and still leaving us with massive government debts.

The solution is to remove the creation of money away from a private corporation (Bank of Canada), and put it directly into the hands of the people’s representatives in Parliament. If the Federal Government were to create currency themselves, they would not be subject to interest charges on the creation of money. Remove the interest charges, and there would be no government debt, and our total taxes would consume no more than 15% of our incomes in order to keep the standard of living this country has today.

The availability of jobs is a reflection of companies ability to withstand the tax burden that’s forced upon them through Central Banking usury.


From: toronto | Registered: Feb 2004  |  IP: Logged
Stephen Gordon
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posted 14 April 2004 02:41 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
The Bank of Canada is owned by the federal government.
From: . | Registered: Oct 2003  |  IP: Logged
brian brian
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posted 14 April 2004 03:19 PM      Profile for brian brian     Send New Private Message      Edit/Delete Post  Reply With Quote 
Shares
(2) The capital shall be divided into one
hundred thousand shares of the par value of
fifty dollars each, which shall be issued to
the Minister to be held by the Minister on
behalf of Her Majesty
in right of Canada.

Bank of Canada Act


From: toronto | Registered: Feb 2004  |  IP: Logged
Fidel
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posted 03 May 2004 10:34 AM      Profile for Fidel     Send New Private Message      Edit/Delete Post  Reply With Quote 
The NAIRU was the clever invention of Milton Friedman. It's a theory of human behaviour with regard to unemployment rates and suggests 8% or so is a natural rate for most economies. Many Keynesian's disagree with Friedman's theory that the unemployed will decide when it's time to take a job when they are offered a wage that earns them more than if they were to stay on social assistance or other supports and determining this ideal point in time by calculating various indicators, like inflation versus cost of living, and deciding when to take a job in this manner.

In other words, Friedman and his disciples belive that people will choose unemployment over the dignity of having a job and living a sweet life because they sit at home and mimick being human computers in calculating several various complex economic measures before deciding to look for and find a job. Friedman's explanation for NAIRU doesn't sound very rational to many people.

See JK Galbraith's(a famous Canadian-American economist) "Time to Ditch the NAIRU" paper on why it's time to ditch the NAIRU.


From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged
MacD
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posted 03 May 2004 12:15 PM      Profile for MacD     Send New Private Message      Edit/Delete Post  Reply With Quote 
James K. Galbraith...

Time to Ditch the NAIRU: Requires subscription to download.

Dangerous Metaphor: The Fiction of the Labor Market, Unemployment, Inflation, and the Job Structure: No restriction on download.

quote:
For instance, a slack labor market is one in which labor is in excess supply (there is unemployment), and, therefore, there is downward pressure on the real value or purchasing power of the money wage. A tight labor market is one in which labor is in excess demand, and, therefore, real wages are rising. The problem is that these connections, fast and intuitive though they
are, are theoretically unfounded and empirically wrong.

[ 03 May 2004: Message edited by: MacD ]


From: Redmonton, Alberta | Registered: Apr 2002  |  IP: Logged
mr-trudo
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posted 07 May 2004 02:33 PM      Profile for mr-trudo     Send New Private Message      Edit/Delete Post  Reply With Quote 
The whole inflation and unemployment agrument with NAIRU has many flaws. First of all, business will try to raise the price of something as high as they can because their goal is to maximize profit. The current surge in gas prices is a good example. If workers demand a wage increase, it is merely cutting in the firm's profits. Worker did make more than firms each year percentage wise until the late 70s but it never caused much higher inflation than today. Inflation is lower today than in the 60s because their is more competition (more small and foreign businesses)that keeps firms prices down. Unions demanding higher wages have no effect on inflation, only on the transfer of wealth.

My explanation for the high inflation of the 1970s and earily 80s was purely because of the energy price shocks that followed by unions demanding high wage increases in order to pay their energy bills and maintain their current standard of living. Meanwhile, firms profits were erased from high energy costs and/or higher labour costs. Businesses laidoff to increase profits causing high employment. It had nothing to do monetary or fiscal policy. OPEC was to blame.

Employment levels today are higher than they were in the 60s but haven't moved much in the last 15 years. Unemployment today consists mostly of temporary workers and the increase of laidoff workers in recent decades that can collect benefits while looking for a similar job or taking time off for family or recreation. In a sense, this is a natural rate, a rate for which the country has been comfortable at since unemployment has fallen off the list of political issues with the exception of isolated single industry regions that suffer depleted resources or foreign competition.


From: Ottawa | Registered: Feb 2003  |  IP: Logged
bugaboo
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posted 08 May 2004 08:43 AM      Profile for bugaboo     Send New Private Message      Edit/Delete Post  Reply With Quote 
The problem I find with Friedman on this point is that he says unemployment is needed to keep inflation low (it's a structural necessity), while also maintaining that unemployment is a personal choice on the part of the unemployed individual (it's an individual problem). It seems to me that if you put these two things together you get a very Marxian conclusion: it's structurally necessary for capitalism to have a contingent of people not working. The difference being that with Friedman it's a rational choice on the part of the unemployed to keep capitalism running.

If this is the case then perhaps we should celebrate the unemployed for their part in helping to maintain a good economy, maybe furnishing them with all the dented cans of tuna and cases of beer they can possibly devour.


From: Toronto | Registered: May 2004  |  IP: Logged
MacD
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posted 08 May 2004 11:24 AM      Profile for MacD     Send New Private Message      Edit/Delete Post  Reply With Quote 
James Galbraith argues in my second link (three posts up) that the "labour market" does not, in fact, exist; i.e. that the price (wages) are not determined by the law of supply and demand, but by a variaety of social/structural factors. He uses the term "job structure" as a more accurate term than "labour market"?

Any thoughts?


From: Redmonton, Alberta | Registered: Apr 2002  |  IP: Logged
steffie
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posted 08 May 2004 01:01 PM      Profile for steffie     Send New Private Message      Edit/Delete Post  Reply With Quote 
"In fact, for the position I have now, I was their second choice - their first choice backed out. Also, for the position before this one, I was also the second choice (and that was a temp job!) - the first temp they had got a permanent job after working for them for 3 weeks, so they asked for me. At both places they told me I was pretty much as good as the other person, but they had to choose someone, so..."

Thanks, Michelle. I was recently 5th choice in a competition for 4 positions, so I know how that feels. Your experiences have renewed my hope for me, and so many other second-bests!

[ 08 May 2004: Message edited by: steffie_slick ]


From: What are the roots that clutch, what branches grow / Out of this stony rubbish? | Registered: Mar 2003  |  IP: Logged
Fidel
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posted 08 May 2004 06:42 PM      Profile for Fidel     Send New Private Message      Edit/Delete Post  Reply With Quote 
Mr Trudo says .. My explanation for the high inflation of the 1970s and earily 80s was purely because of the energy price shocks that followed by unions demanding high wage increases in order to pay their energy bills and maintain their current standard of living. Meanwhile, firms profits were erased from high energy costs and/or higher labour costs. Businesses laidoff to increase profits causing high employment. It had nothing to do monetary or fiscal policy. OPEC was to blame. [/b/

An conservative politicians in the States and around the world tried to make a case that inflation is bad for everyone in all shape and form and have been obsessed with reducing inflation because it erodes the wealth and assets of the super wealthy. They paid mathematicians to prove inflation was bad for everyone as a whole. Great rewards were at stake for those who could generally prove that there is a need to keep inflation at or close to zero percent and for central banks to drop their mandate for balancing economic growth with that of fighting inflation for the latter one alone. The 1970's energy crisis arrived and they finally had what they thought was a case for virulent inflation of apocalyptic proportions. They would make UI-EI-O and welfare more difficult to obtain because 4% and 5% unemployment rates were too high and us slobs were taking advantage of the system. Everyone seemed to have a story about ski bums at Mont Tremblanc and Whistler having their UI cheques forwarded to them at vacation resorts. The 80's rolled in and monetarist policies of Milton Friedman were implemented in England and the United States. Canada experimented on its own by ratchetintg up interest rates to attract foreign investment.

But the result of all that monetary tightening didn't work so well in Britain or the States as the federal reserve abandoned Milton Friedman's momnetarism in favour of Keynesian policy in 1982 and eventually, so did the Bank of England in 1986 as a result of the monetary disaster that unfolded there.

And with all that new "incentive" for more Canadians to take low paid work in the early 1980's, Canada's, too, was to become a more efficient economy with low inflation and economic stability. But with EI less generous and harder to obtain and welfare benefits slashed and diminished, the unemployment rate was actually higher during the early 1980's than was true of the relative booming 1970's. But they did kick heck out of inflation, that much was true.

Mr Trudo says ...[b] Employment levels today are higher than they were in the 60s but haven't moved much in the last 15 years

People got jobs for life in the 60's and 70's. Those were the best economic times for job opportunities the western world has ever known... except for the roaring '90's maybe.


From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged
Fidel
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posted 08 May 2004 07:04 PM      Profile for Fidel     Send New Private Message      Edit/Delete Post  Reply With Quote 
Darn! Messed that post up with misplaced bolding. Sorry.

I might add that the conservative right's case for inflation in the 1970's was unfounded, but they still continued with their political agenda to introduce the "cure". And that cure was to reduce social program spending. Social program spending, according to the right, was responsible for "runaway" inflation as well as mounting national debt. Around the world, they said. But even the most conservative economists now realize that 1970's inflation was, as Mr. Trudo points out, due to the global energy/oil crisis.

But conservative politicians went their merry way with another angle of attack on social programs, as Humes did similarly in Britain, warning us that the sky would fall because of our mounting national debt. And a Stats Canada employee released a report on the breakdown of our deficit payments in the 1980's for which he was castigated by the Mulronney conservatives for undermining their credibility with regard to their agenda for slashing social programs in Canada. The report said our federal annual deficit payments in the 1980's were broken down like this:

50% was due to compound interest
40% was due to unpaid and deferred corpoate income tax
8% was due to program spending in general
4% was attributed to social program spending - not including transfer payments to provinces for health care

And Paul Martin continues to underfund university education and health care in Canada. Jack Layton Says there are 13 social democracies in the world that have no tuition fees for university education. Even India has free universities for the disadvantaged and are churning out engineers at three times the rate that we do in the far west.


From: Viva La Revolución | Registered: Apr 2004  |  IP: Logged
nevertaken
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posted 13 May 2004 09:36 PM      Profile for nevertaken     Send New Private Message      Edit/Delete Post  Reply With Quote 
Hello all, I'm new here.

I'm a bit confused as to the premise of NAIRU. From what I can tell the theory is that if there was zero unemployment then more people would be making money so price would be driven up causing inflation.

From what I understand inflation is caused by there being more money in circulation relative to available goods and services (ie, if everyone has lots of money and there aren't much G&S then the G&S will cost more money).

NAIRU seems to overlook that fact that if there was zero unemployment then not only would there be more people making money, but also more people producing goods and providing services. In a free market these two factors should balance each other out so increased employment should not affect inflation.


From: Calgary | Registered: May 2004  |  IP: Logged
dnuttall
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posted 14 May 2004 12:17 PM      Profile for dnuttall     Send New Private Message      Edit/Delete Post  Reply With Quote 
Mac D;

I agree, to some extent, that supply and demand do not control wages. But they do influence it. The job market is anchored by people's tendancy to not seek change environs, and financial considerations on how long people would be willing to be unemployed.

Business culture, flexibility and management style (among others) all will significantly affect what people will be willing to accept for their labour. But if you're trying to hire a rare bird, you'll have to pay for it in some way.


From: Kanata | Registered: Mar 2004  |  IP: Logged
lonecat
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posted 14 May 2004 03:40 PM      Profile for lonecat   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
There will always be some level of unemployment in a nation, even if every effort to made to accomodate the unemployed in the work force.
This is true, because there will always be 1-3% of the labour force between jobs, or looking for a first job.
If Canada had an average unemployment rate of 1 to 3 percent every year, that is as reasonably close to full employment that we could ever get.
I believe that target is realistic, but there isn't the political will in Canada right now to make this scenario happen.

From: Regina | Registered: Apr 2004  |  IP: Logged
MacD
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posted 14 May 2004 04:22 PM      Profile for MacD     Send New Private Message      Edit/Delete Post  Reply With Quote 
I agree, lonecat: short-term unemployment due to changing jobs and long-term structural unemployment are not the same thing. I also agree that there is a lack of political will to achieve full employment.

I think there is a connection between this lack of political will and the NAIRU. Despite Magoo's claim that lefties use the NAIRU to justify "laziness", the NAIRU is an invention of the right (e.g. Miltie Friedman) that is used to justify government inaction on unemployment: since unemployment is natural (the argument goes), it is futile for government to attempt to bring about full employment...better to protect the value of money and "Gee sorry our policy cost you a job but there was nothingelse we could do."


From: Redmonton, Alberta | Registered: Apr 2002  |  IP: Logged

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