What's Worse: High Unemployment or Inflation?

Curious Capitalist: 

The Wall Street Journal has a story today pointing out another long-term problem of high unemployment: it affects not just the finances of the unemployed, but potentially can reduce the future earnings power of their children as well. If Mom and Dad don't have a job, then they can't save for college. If they can't save for college, junior either doesn't go to college or will have to take on debt. Studies have shown that graduating deep in debt can lead to financial instability for years. The result:

Many families such as the Johnsons—upper-middle-class professionals—are suddenly downwardly mobile. For years, they used rising family wealth to help foot the bill for college, down payments for houses and start-up cash for children's careers. But pay cuts, layoffs and the decadelong flatlining of the stock market mean many families can no longer help their children.

Invariably, when we start debating jobs programs and stimulus spending, people start talking about the long-term problem of government spending. It raises our national debt, and could cause inflation down the road. But what is often overlooked when inflation is brought up, is that not doing anything about high unemployment can have really bad long-term ramifications for the economy, perhaps even worse than inflation. Here's why:

First of all, it's not just upward mobility that is at risk. I wrote a story back in January about high teen unemployment and that what is at risk is not just whether teens will have to cut out trips to the mall. Without entry-level jobs, young workers can't gain work experience. The result is a lower skilled workforce that results in longer-term productivity for the US economy in general.

Read more: http://curiouscapitalist.blogs.time.com/2010/04/05/whats-worse-high-unemployment-or-inflation/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+The+Curious+Capitalist%29#ixzz0kIlg8Cmi

Posted via email from Jim Nichols for GA State House