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Comment by cabalamat | Hacker News Reader

> Why less? Because there are 9 people waiting to take his job if he quits

This is the answer

I wonder where those 9 people are though. Locally, for a given job opening, that could perhaps be true. Nationally however, unemployment is at historically low levels in many Western economies; 4.3% in the UK, 4.4% in the US, 3.9% in Germany, 6.2% in Canada, 4.8% in New Zealand.

Which should then drive an increase in wages. But it hasn't, and economists don't know why - or at least as far as this armchair economist has read ;-)

That guy who works 12 hours a week in the grocery store, because the company doesn't give him any hours most days? Doesn't count as unemployed, but might as well be.

The US unemployment rate is based on the labor participation rate, a measure of the percentage of people who are unemployed and currently looking for work. It does not account for people who are unemployed and not looking for work. There is a real surplus of labor and employers know it. The vanity statistic that the US publishes has no basis in reality.

I don’t think that’s a very good description of U3, which is the headline rate the US typically uses. Specifically, labor force participation is usually a shorthand for overall workforce participation, looking at everyone of prime working age; that’s not U3. All unemployment measures are linguistically indistinguishable from “labor force participation rate”, so there’s nothing special about the US there.

I agree that U6 and prime age labor force participation rates are both weak, and relevant to worker bargaining power, but to argue that U3 has no basis in reality is absurd.

If I’m looking for labor this month, my pool of applicants will be coming from the U3 pool, people who are actively looking for work.

High U6 unemployment suggests I might do better to raise wages slightly, rather than aggressively, if I urgently need workers.

Or, the more likely reason - there are NOT people willing to do those jobs.

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