Long Road to Job Recovery

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Apologies, I'm presuming that as the US economy was doing quite well and then it turned out that it was structurally unsound and had to contract that it was probably below full employment. It seems probable to me but I'll happilly be corrected if wrong.

 

I believe that the US or New Zealand fall between 2-6%, that's not really the problem. What seems a bit unsound in that figure is that a large number of countries qualify outside 2-6% in their natural level of unemployment, making it somewhat dubious to use it as a general definition where the level of full employment lies. To me a figure like 2-8% would make more general sense, since practically all functioning western free market economies would fall within that bracket.

 

I don't know of any modern industrialized nation that has got to 2% - ever. The lowest I can recall was in the late 1990s (right before the dotcom bubble burst) where the US had unemployment down around 3%. I'd imagine that you'd get a standing 2%-3% unemployment just from people switching jobs.

In the graph that Rotku posted, it does appear that the US may have got down below 2% towards the end of WWII, but that represents a very special circumstance. You had millions of able-bodied men serving overseas - taking them out of the workforce - combined with a nation in full industrial production for the war effort. So while getting below 2% is theoretically possible, I do not think it is sustainable.

I cannot speak for the unemployment rate in Europe, but I'd probably rate full employment as between 3%-6% in the US. Over 6% may not be considered high all across Europe, but it is in the US.

I also agree that all European countries must have some means of factoring people out of the unemplyment statistics who are not actively seeking employment. If everyone between 16-65 really means everyone, some European countries would never see their unemployment fall below 10%. As others have said, housewives alone probably make up several percent of a population. That doesn't count vagrants or people who retire prior to age 65 for whatever reason. It also seems fairly logical that in order to be considered unemployed you have to be seeking employment...

 

I think Denmark reached that point not too long ago but I'd say that's not exactly their natural level of unemployment. An unemployment of 2% is bound to be problematic for future growth. It's difficult to evaluate where the exact level of natural unemployment lies in each nation, since it tends to shift through time and is different for every economic cycle. It would make monetary and economic policy a lot easier if we'd know the natural level of unemployment and know where to set the target.

It's also worth noting that this crisis is different from many in the past in that this began and still is mostly about the financial sector and only in some countries about the actual overheating of the economy, making it different from previous recessions, and effectively makes newer macroeconomic models redundant.

I'm not sure how exactly various institutions count unemployed and what's considered to be inside the laborpool, but I'd imagine that in Finland unemployed are generally considered those who recieve any sort of unemployment related benefits from the state. Housewives usually don't qualify (allthough we have very few of those these days) since they rarely get any benefits.

 

A significant number of unemployed are also in seasonal jobs. Teachers in this area get unemployment during the summer. Construction workers get unemployment during the winter.

 

That's not all that usual in Finland because of the strong unions that strive to keep people employed throughout the year, it's getting more common though.

 

Wow - teachers qualify for unemployment in the summer in Illinois? My wife, being a public school teacher for eight years in Maryland before becoming a stay-at-home mom, was never eligible to collect unemployment benefits. Granted, Maryland spreads the paychecks of teachers out throughout the year so people have a steady income stream, but it's not like teachers are being paid for time they are not working during the summer. Instead they are getting paid less during the year so they can continue receiving paychecks in the summer. (Also, teachers in Maryland get paid extra if they elect to teach summer school.)

Construction workers do get unemployment in Maryland however, and it would seem like that a similar benefit package could be worked out for them: i.e., get paid less during the spring/summer/fall in order to continue to receive checks in the winter. (Note: I'm not complaining that construction workers are not working in the winter - I understand that it's near impossible to lay a road when the ground is frozen solid.) I'd also imagine that the salaries of a lot of construction workers (epsecially the ones that operate the heavy equipment) are comparable to teacher salaries, so if it can be done in one case, it seems like it should be able to be done in other cases.

Now T2 has really got me thinking, and I'm curious as to what happens in other states. I can only speak for the two states that I have lived in for any extended period of time - Pennsylvania and Maryland. In both cases teachers could not collect unemployment in the summer but construction workers could in the winter. It's because of this that I never considered teachers to be seasonal workers.

 

I'd imagine it's to do with the nature of the employment. In Ireland there are two grades of teaching jobs: permanent and temporary. A permanent teacher will get paid over the summer. A temporary one will not as there's no guarantee that they'll be given a job in the next year. (In practice teachers will start in a temporary post when they first qualify and are kept on in the same school until a permanent vacancy comes up). Temporary ones will qualify for the dole over the summer.

I'd imagine the issue with construction is the large movement of staff. Workers will leave their employer as the projects are finished and as new ones start. If the employer isn't employing them for the full year he/she's probably not in a position to spread their pay over the year. Using the social welfare system is the easy way out of this, rather than coming up with a complex schee to administer.

 

When I lived in Pennsy, I never understood why a construction worker needs to collect in the winter, that is such crap. It doesn't get that cold there. Plus, even if you specialize in one type of job, say Custom Decks(which i did for 2 years while trying to land in the field of my choice), you still have the skills to do other types of work, they all cross over. If you don't, your in the wrong business with no knowledge base whatsoever. In the winter, switch to finishing basements, electrical or flooring, anything really. Just sitting on your butt all winter collecting money that could be better used by all elsewhere is such a lazy way to live.

 

Aldeth, I'm not sure if all teachers can collect unemployment -- but the ones on contract can as the contract expires at the end of the school year. I think once a teacher has tenure they are considered year round employees, but I'm not sure.

 

T2 - I really don't know one way or the other, especially considering I've never known anyone who taught in Illinois. I know my wife has never received unemployment benefits since she became a teacher, even before she was tenured. And the only reason I'm so familiar with the way the system works in Maryland is because I married a pubic school teacher.

 

I get paid during the summer holiday and I am a teacher. We have X amounts of work hours per year so I work slightly more during the year (45h/week instead of 40h/week iirc) and receive full pay during holidays. Right now I am in the last week of two months paid vacation!