Even though unemployment is at 4.5%, underemployment is a growing issue in our economy today. There are two prevalent views from economists on how to deal with this problem. The first solution is that the government should intervene and make the public sector hire more employees. Other economists instead favor the idea that the private sector should instead create more jobs in the future.

The tradeoff here is simple, should the government intervene with the public sector to produce more jobs or should they create the jobs themselves? Furthermore, the scarcity we are dealing with is full-time jobs and both economists agree that equality should be created for people who can only find part-time work. I personally side with the economists that believe that the private sector should create more full-time jobs.

One of the prevailing principles of macroeconomics states that markets are usually a good way to organize economic activities. These activities include how to produce goods and who gets them. Additionally, we have a market economy here in the United States, which means that our resources are allocated through the decentralized decisions of the entities that interact in the market. It is because of these reasons that I believe that the government shouldn’t interfere with the public sector if they want more jobs to be created.

Another popular principle of macroeconomics says that governments can sometimes improve market outcomes. The only way the government would be able to make more jobs in the public sector would be to offer incentives, which would make our debt increase since incentives to businesses are costly. Passing laws wouldn’t work as effectively since every business is unique and has their own system of taking on more employees. However, creating jobs in the private sector would have the smallest impact on taking on debt since the government would just need to pay salaries and wages, not offer large incentives to corporations.

Underemployment: Public vs. Private Sector Solutions
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