Do you believe that Capitalism requires 5.5% unemployment?

[auditor0007]

Do you consider unemployment bad? My friend claims that capitalism must have 5.5% unemployment to function effectively. The idea he summarized was that with unemployment lower than 5.5%, this would lead to massive inflation and that would decrease the value of wages of all the workers. Does it have any basis? This fall we had something about 10,7%? Obama was not good at solving the problem. How do you see this unemployment nowadays?

4% is the threshold used by most economists. Once unemployment goes below 4% it becomes much more difficult to find workers without offering higher pay, and then you are just stealing the employee from another employer, so it can create a cycle that puts some pressure on prices. Businesses really do not like it when unemployment is this low.

 

[JoeB131]

4% is the threshold used by most economists. Once unemployment goes below 4% it becomes much more difficult to find workers without offering higher pay, and then you are just stealing the employee from another employer, so it can create a cycle that puts some pressure on prices. Businesses really do not like it when unemployment is this low.

I would agree with that to a degree- but.

The problem is, we have a two track economy. FOr those of us with jobs, finding a new job is easy. Send out some resumes, you will get interviews and callbacks.

But if you were one of the people who lost his job early in the recession and dropped off the radar when your benefits ran out, getting a job is a lot tougher.

 

[SuperDemocrat]

Do you consider unemployment bad? My friend claims that capitalism must have 5.5% unemployment to function effectively. The idea he summarized was that with unemployment lower than 5.5%, this would lead to massive inflation and that would decrease the value of wages of all the workers. Does it have any basis? This fall we had something about 10,7%? Obama was not good at solving the problem. How do you see this unemployment nowadays?

Must defend Obama...must defend socialist economic policies...must cum up with bullshit....will starve before I learn I am wrong.