eli5: Why is high unemployment rate bad and why are people who are employed still worried about this even though they have a job?
In: Economics
1) People without jobs are a drain on the economy. They require assistance and support and all that costs money.
2) People have relatives/friends/loved ones/associates that may be unemployed and most people give a fuck about other people and sometimes, even people that they don’t personally know.
Fucking shocking, right?
A high unemployment rate is bad for you if you are looking for a job because it means that there are more people to compete with for any job that you might want.
Conversely, a high unemployment rate is good for you if you are hiring people because it is easier to find good candidates.
Because a high unemployment rate makes it easier to hire new employees, it makes existing jobs less secure. This is one reason people who have jobs should be worried about rising unemployment.
Essentially, the unemployed population makes up what is called the “reserve army of labor”. Having this reserve is bad for the already-employed because it gives business owners more leverage against their employees, particularly regarding wages or benefits. An employeed person is pressured not to organize or pursue higher wages because the employer can more easily fire them and replace them with one of the many desperate unemployed people who are probably content working for much less money, because even the bare minimum is better than nothing at all. The more unemployed people there are, the more competition exists between them between the available jobs, driving them to settle for lower wages, less benefits, or more demoralizing conditions.
In the US having a job is a requirement to live for most people. Without income from work the vast majority of Americans would not have enough money to afford basic necessities like food and shelter.
Employed people are worried about high unemployment because it is *very* easy to become unemployed through no fault of your own.
Something others are not touching on is the idea that as unemployment rises, so too does crime, as people get more desperate when they don’t have an income. This is bad in general, but also affects the people who do have jobs, making it a concern for them as well.
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