Supply and demand with a twang

​Classroom Polling

Title: Red, White, and Pink Slip Blues

​Artist: Hank Williams, Jr.

Economic Concepts: Unemployment rate ; Structural unemployment ; Discouraged workers ; Spending multiplier ; Trade; Specialization

Details: When a business closes its doors, it has repercussions for the entire community.  This is especially true for a large industrial firm located in a small town.  In this video,   
the mill was the economic engine of the town until it outsourced its operations.  "The mill was hummin' twenty-four seven.  I was formin' on the line, three to eleven.  But eighteen months, two days ago the Mill closed down and moved to Mexico."  This is an example of structural unemployment which is typically characterized by long periods of unemployment.  The workers at the mill most likely had job-specific skills that are unlikely to be needed in other industries, and are also unlikely to find jobs with similar pay in their community.  This leads to either long periods of searching or workers spending significant amounts of time to obtain skills and education for other fields of work.

        When workers are unemployed for extended periods of time, this can lead to frustration and depression and may cause some workers to give up looking for a job.  "I paid my bills, I paid my dues.  I payed my share of taxes too…I've got the red, white, pink-slip blues."  In economics, these individuals are called discouraged workers and are no longer members of the labor force and technically not counted as unemployed.  This is a great opportunity to talk  to your students about the shortcomings of the headline unemployment rate, referred to as the U-3 unemployment rate.  A more comprehensive measure of the labor force is the U-6 unemployment rate which includes discouraged and other marginally attached workers, as well as the underemployed.

        As previously mentioned, a business leaving town produces negative effects for others in the community, even those not directly associated with the closing.  Since income has decreased for the workers who have lost their job, it is not surprising they will be forced to decrease their consumption.  "Now I can't buy my baby shoes."  This is a good example of the spending multiplier and how a decrease in income and spending will have a multiplied effect on overall GDP.  Local businesses will experience a decline
in sales which may lead to further lay offs and higher unemployment in the community.

        Lastly, there are winners and losers from specialization and trade.  Clearly, the local community is worse off as a result of the plant moving to Mexico.  However, we should also recognize
that society as a whole is better off as specialization and trade leads to more goods at a lower price which benefits consumers.      


I used to love this town and this neighborhood
The streets were safe, the schools were good
The mill was hummin' twenty-four seven
I was formin' on the line, three to eleven
But eighteen months, two days ago
The Mill closed down and moved to Mexico

I paid my bills, I paid my dues
I paid my share of taxes too
Now I can't buy my baby shoes
I've got the red, white, pink-slip blues

I hide the pickup truck in Ricky Browns garage
Over on the next block, cause there's Repo's to dodge
I slip out the back door Lord, I never thought I'd live to see this day
We're gonna need that truck when they come to take the house away

You know I love my country and I'm not one to complain
But there's a lot of us that feel like we've been left out here
Out in the rain

I paid my bills, I paid my dues
I paid my share of taxes too
Now I can't buy my little baby shoes
I've got the red, white, damn pink-slip blues