Wednesday, December 16, 2015

Is 5% unemployment full employment?

Reality and theory drift apart. For the Fed (reality), 5% means 'full employment' and for the mathematicians (theory), it is not.

When you're not collecting unemployment, you're not counted as unemployed. There are many holes in how they define the 5%. If you lose all the benefits including free health care in some states, you are better off to be unemployed.

In Hong Kong, 2% is full employment as their welfare system is not that great. In China where you do not work, you do not eat, it could be close to 0%.

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