About a quarter of century ago, Cyndi Lauper’s “Girls just want to have fun” was a hit song. Do the unemployed “just want to have fun” and do so by voluntarily remaining unemployed? Have the 15 million Americans and 1.5 million Canadians who are currently unemployed decided that they are better off remaining unemployed than accepting or creating a job?

If one looks closely at the economic theory on this subject, one might conclude, and rightfully so, that unemployment is largely a voluntary activity. Does this mean that whatever the unemployment rate and the numbers unemployed, there is little need for governments to do anything to reduce the rates and numbers?

There are many economists who argue that it is precisely because of certain government policies (e.g., minimum wage laws, unemployment insurance, social assistance) that many people choose to be unemployed and thus artificially inflate the unemployment rate. For most of the past 20 years, when unemployment rates in Europe were persistently higher than in the U.S., a common argument was that much higher social safety nets in Europe diminished the need for the unemployed to search for a job or take one that was not considered attractive.

At a simplistic, theoretical level, unemployment is voluntary. If the unemployed lowered their expectations rapidly they could find a job. Or they could become self employed – selling apples on street corners for example. They do not lower their expectations quickly, and thus remain unemployed for much longer periods of time, because of the existing social safety nets which allow them to be “choosy”.

Hence, focusing on unemployment rates is misleading because they do not fully reflect the real costs of unemployment, and this focus opens the opportunity for critics to claim that there is no problem other than existing government social policies. There have been many empirical studies which have shown positive correlations between health problems and unemployment levels, the incidence of family breakdowns (including spousal and child abuse) and unemployment rates, the incidence of criminal activities and unemployment, and the erosion of human capital (skills, attitude, motivation, productivity) and unemployment rates. The social costs of high levels of unemployment and/or long durations of unemployment are enormous – much higher than the social and economic costs of an increase in the rate of inflation from 2% to 4%.

Part of the focus should be on the income losses suffered by the unemployed, including those on Wall Street. The income losses take three forms: the losses while unemployed; the losses resulting from accepting lower paying jobs; and the losses resulting from accepting jobs with much poorer prospects over time. So what if the unemployment rates in Canada and the U.S. decline to 6% within the next two years? A small percentage of the labor force will have suffered permanent and substantial declines in their incomes and wealth, with destructive social consequences.

Part of the focus also should be on the very small group in the labor force that are stuck in dead-end, unattractive jobs which lead to frequent spells of unemployment, and the small group that remain unemployed for very long periods of time. These two groups, which collectively comprise a small proportion of the labor force and the aggregate number of people who experience some unemployment, account for a disproportionately large share of total unemployment.

Creating more jobs alone does not solve the “unemployment problem”. The quality of the jobs matter. Further, policy makers should favor pushing on the accelerator of economic growth rather than stepping on the brakes at the first signs of the inflation rate breaking through 2%. Strong and persistent growth will do more to rectify the real unemployment problems, than short-term Keynesian-type, counter-cyclical policies.

The opinions expressed in this blog are personal and do not reflect the views of either Global Brief or the Glendon School of Public and International Affairs.