> People could be laid off from company A, because A is unable to compete with company B that has a smaller head count, but pays their execs more.
This is exactly the scenario I was describing - this is not a sign of a cooling economy with rising unemployment or underemployment, this is a sign of firm B outcompeting firm A. It might be interesting in its own right, but it's very much not what unemployment is meant to be tracking.
> Sure, but the point is that metrics used to discuss economic health don't typically include metrics that represent wealth inequality, or the standard of living of the general population.
Tons of such metrics are frequently discussed. Things like ratio of CEO to employee pay and income percentages are given all the time. No one feels the need to compare the unemployment rates when it's mentioned CEO to employee pay has increased from 20:1 to 290:1 since 1960. Everyone understands that the economy is a complex, multifaceted thing and the fact it may be doing well or poorly by one metric has no bearing on a discussion of a different aspect.
People care about employment rate because work is critical to our culture - we spend most of our lives working, we identify ourselves by our professions, we rely on income for both survival and social status, most of us would find it extremely unpleasant to be without a job for an extended period of time, and most of us would be delighted if our skills were in high demand at the moment such that we could confidently secure better pay. Regardless of wealth inequality, the overwhelming majority of us want unemployment to be low, and primarily frictional. An unexpected spike in unemployment is well correlated with various bad things which we would love to avoid or at least prepare for. It is a useful metric for economic health, like resting heartrate is a useful metric for bodily health. A good resting heart rate doesn't mean you have nothing else to be concerned about, but a bad resting heart rate is a concern regardless of whatever else is going on.
> This is exactly the scenario I was describing - this is not a sign of a cooling economy with rising unemployment or underemployment
It could be. What if B is outcompeting because they have offshored labor, or using new technology that reduces demands for labor. Not that those things are necessarily bad, but just because the total productivity is increasing doesn't necessarily mean everyone is better off.
My point is that the situation described can happen without a change to the average income, and average income isn't a good metric for watching changes in wealth inequality.
> but it's very much not what unemployment is meant to be tracking.
I never said it was.
> Tons of such metrics are frequently discussed. Things like ratio of CEO to employee pay and income percentages are given all the time
IME, such things are talked about much less than unemployment, especially in relation to politics and policy.
And I think part of the reason for that is because it is easy to understand, and it is easier to control with policy than other metrics, since the government can just create new jobs and provide incentives to create jobs, even if those jobs are lower paid than the jobs that were lost.
This is exactly the scenario I was describing - this is not a sign of a cooling economy with rising unemployment or underemployment, this is a sign of firm B outcompeting firm A. It might be interesting in its own right, but it's very much not what unemployment is meant to be tracking.
> Sure, but the point is that metrics used to discuss economic health don't typically include metrics that represent wealth inequality, or the standard of living of the general population.
Tons of such metrics are frequently discussed. Things like ratio of CEO to employee pay and income percentages are given all the time. No one feels the need to compare the unemployment rates when it's mentioned CEO to employee pay has increased from 20:1 to 290:1 since 1960. Everyone understands that the economy is a complex, multifaceted thing and the fact it may be doing well or poorly by one metric has no bearing on a discussion of a different aspect.
People care about employment rate because work is critical to our culture - we spend most of our lives working, we identify ourselves by our professions, we rely on income for both survival and social status, most of us would find it extremely unpleasant to be without a job for an extended period of time, and most of us would be delighted if our skills were in high demand at the moment such that we could confidently secure better pay. Regardless of wealth inequality, the overwhelming majority of us want unemployment to be low, and primarily frictional. An unexpected spike in unemployment is well correlated with various bad things which we would love to avoid or at least prepare for. It is a useful metric for economic health, like resting heartrate is a useful metric for bodily health. A good resting heart rate doesn't mean you have nothing else to be concerned about, but a bad resting heart rate is a concern regardless of whatever else is going on.