Cost of Livin'

EconGoneCountry

Supply and demand with a twang

Title: Cost of Livin'

Artist: Ronnie Dunn

Economic Concepts: Business cycle; Recession; Cyclical unemployment; Job search; Inflation; Normal goods; Spending multiplier

Details: The video illustrates the closing of a factory in Union City, a small town of roughly 10,000 located in northwest Tennessee. This video illustrates numerous macroeconomic concepts. To begin, the song writer states that the closing of the plant is "probably going to have a ripple effect and dry the whole town up". The closing of the plant will have a greater impact than just the loss of the 1,900 factory jobs, because those people will have less income and therefore spend less at the grocery store, movie theater, etc. In economics, when one dollar spent changes income by more than one dollar it is referred to as the spending multiplier.

A capitalist economy will go through phases of expansion and contraction which is called the business cycle. When we are in the contractionary phase of the business cycle, referred to as a recession, there is intense competition for jobs. For example, during the Great Recession in 2009 there were 6.6 applicants for every job opening compared to roughly 1.5 pre-recession*. In the song, a man lists all of his qualifications for the job but realizes "I'm sure a hundred others have applied, rumor has it you're only taking five".

This video can also be used to discuss the job search and what the BLS calls "actively seeking employment". An example of actively seeking employment would be looking through help wanted ads and then submitting a job application. Different types of unemployment can also be related to the video. In particular, a discussion between whether this factory closing is an example of cyclical unemployment, structural unemployment, or both?

Income as a determinant of demand is also on display in this video. We know that when income decreases, the demand for normal goods will decrease. In the grocery store the little girl asks her mother if she can have a bag of chocolate but her mother sadly tells her no. During the Great Recession, lower income meant people were only buying what they needed to get by.

*http://www.bls.gov/web/jolts/jlt_labstatgraphs.pdf

Lyrics:
Everythin' to know about me
Is written on this page
A number you can reach me
My social and my age

Yes, I served in the army
It's where I learned to shoot
Eighteen months in the desert
Pourin' sand out of my boots

No, I've never been convicted of a crime
I could start this job at any time

I got a strong back, steel toes
I rarely call in sick, a good truck
What I don't know I catch on real quick
I work weekends, if I have to, nights and holidays

Give you forty and then some
Whatever it takes
Three dollars and change at the pump
The cost of livin's high and goin' up

I put Robert down as a reference
He's known me all my life
We attend the same church
He introduced me to my wife

I gave my last job everythin'
Before it headed south
Took the shoes off of my children's feet
Food out of their mouths
Yesterday my folks offered to help
But they're barely gettin' by themselves

I got a strong back, steel toes
I rarely call in sick, a good truck
What I don't know I catch on real quick
I work weekends, if I have to, nights and holidays

Give you forty and then some
Whatever it takes
Four dollars and change at the pump
The cost of livin's high and goin' up

I'm sure a hundred others have applied
Rumor has it you're only takin' five

I got a strong back, steel toes
I'm handy with a wrench
There's nothin' I can't drive
Nothin' I can't fix

I work sunup to sundown
Ain't too proud to sweep the floors
The bank has started callin'
And the wolves are at my door

Four dollars and change at the pump
The cost of livin's high and goin' up

Classroom Polling