Are Employers Not Hiring, or Workers Not Wanting to Work?

Newly-elected President Barack Obama is not exactly the first professor from the University of Chicago to actually serve in the Senate of the United States. A little over fifty years ago, Paul Douglas (also a professor at the University of Chicago) became an Illinois representative of the United States Senate. Because he was an economics professor, Paul Douglas had written lots about the law of supply and demand – especially for labor. A lot of the techniques he wrote about may actually lead us to come to a very surprising conclusion regarding the recession that is happening today: that the most recent decrease in the employment rate is probably due to the fact that there is less unwillingness on the part of employers to actually hire even more workers, and that there is a lot of unwillingness on the part of workers to actually make the effort to work.

Actual Rates of Unemployment

You may have heard this time and again – especially now in these hard times – that the employment rate has been experiencing a steady drop ever since the previous year. It had peaked in December 2007, but had experienced a one point four percent drop during the following eleven months. The hours that were clocked in for each employee also fell. The result of this, should the total number of working hours continue to push the upward trend it had been on during the previous years prior to the recession, it would end up being four point seven percent higher compared to where they are at the moment. Some explanations for such a decline – similar to most things related to economics – may be classified into two different ways: either supply, or demand.

Supply and Demand: Which Trumps Which?

In a lot of experienced recessions, the labor demand would probably get the bulk of the blame. There is a demand explanation for this which says that for such product orders to go down, a lot of companies must indeed have some trouble looking for more productive ways to utilize their employees. There are also some workers who are then forced to sever ties with. Thanks to this, the output of productivity – which is the total amount of production that is made per working hour – must then experience a decline since there is the reduced productivity which is the actually the driving force of the layoffs. Two reasons for the decline in gross domestic product then comes up: that there are fewer workers on the work trail and each one experiences and produces an even smaller amount of effort on productivity. The rate of productivity, says experts, has fallen down three out of four quarters since the 1981 to 1982 recession.