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Why is it difficult to agree on who constitutes full employment? |
Why is it difficult to agree on who constitutes full employment? because sometimes it's difficult to follow the question Another way to look at unemployment is that it is derived from the average time that it currrently takes a person to find a new job after leaving the old one. If absolutely nobody is between jobs, or if everyone switching jobs is able to do so instantaneously, then employment is a perfect 100%. Obviously, this never happens. There will always be some people who take a while to move from one job to the next. And, since corporations make severance payments and the government pays unemployment benefits, some people can justify lingering between jobs, or are slow to start looking, or perhaps they are picky at first about what new job to take. These people are all defined as unemployed. Some people take longer than others to find a new job. As long as they are looking, they are still defined as unemployed. As economic conditions worsen, that average lenth of time to find a new job increases overall. Interestingly, if a worker gives up, and is no longer seeking employment, that worker no longer counts as an unemployed person. As economic conditions improve, workers are inclined to demand higher wages at the new job, thus creating inflation. So, your question is really about what is a realistic average length of time for workers to find new jobs without giving up and without initiating wage inflation. Clearly, as you can see, this is a matter of opinion and judgment. Economists used to think that the minimum level of unemployment without inflationary pressure was probably about 5% or 5 1/2%. In recent years, however, the US has had long stretches of time when inflation was low, yet unemployment was significantly below 5%. This is causing economists to revisit their earlier benchmark. Full employmnet is at least 40 hours per week. Part time employment is less than 32 hours per week. When you are classified as part time, the company does not have to offer you benefits like health ins. and stock options or Ira's and retirement. Don't know I thought full employment was 4.5% unemployment. What does this question mean? |
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