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The surplus labor army is useful for driving down the wages of the employed, to increase the profits of the employers. Why pay 3/4 of the population to work 40 hours a week when you can pay 3/4 of the population to work 40 hours for what they used to be paid for 39 hours, holding the threat of the competing jobless 1/4 against them? This is grossly simplified, of course, but why would any company try to optimize for the benefit of society over their own?


The problem with your theory is that wages have not decreased even as unemployment has skyrocketed.

http://research.stlouisfed.org/fred2/series/ECIWAG




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