Why will there always be at least some unemployment? Give an example of a public policy that affects the unemployment rate. Is it positive or negative? Why?
As a part of the Federal response to the Covid-19 pandemic a $600/week federal unemployment stipend was added to the state unemployment stipends. How would you expect that to affect unemployment? Was it an appropriate response to the pandemic? Why or why not?
Unemployment will always exist as workers will want the freedom in the marketplace to leave a job and look for another. Minimum wage policy would affect the unemployment rate by forcing a surplus of workers back into the labor force which would exceed business demand for that labor. I think moving up the minimum wage slowly is good policy as it helps the lowest level of the workforce to have a living wage. Many of our people in the USA are living below the poverty level and boosting the lowest minimum wage will help them. If it’s set too high that will be a big problem. Also, each region, state, and city should have some flexibility to control their own minimum wages. The national minimum won’t always work in lower cost of living places.
We saw how the added unemployment benefit caused the labor market to suffer as more workers wanted to get paid to not work. Many businesses had trouble finding workers to fill jobs after the uptick in demand forced businesses to scramble. I think it was the right response to the unemployed caused by government forced business shutdowns, but letting it expire helped the labor market and hopefully they leave it be and let the markets return to normal as demand has certainly picked up with the reopening.
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