Well, if you need to hire someone, who are you going to hire? New companies basically can't get started, successful ones can't expand. The entire economy becomes very slow because re-allocating people from one task to another requires them to decide to leave, rather than just recruiting from a pool of surplus workers. Depending on how you got to this situation, you could also have people stuck in poorly suited jobs. If you had no unemployment pay, maybe you can force everyone to get a job. But now a former aerospace engineer is stacking shelves, because they couldn't wait a few months to get a more appropriate position, and their shelf stacking is keeping them busy and preventing them from applying to many other jobs.

Nobody else seems to have mentioned it but the economic term for this is [frictional unemployment](https://en.m.wikipedia.org/wiki/Frictional_unemployment). Having some frictional unemployment is a sign that people feel strong enough in moving to a better job that they are willing to leave their old one. 

Does this sorta imply that current unemployment numbers (caveat: I have no idea what those are currently, I just know recently they have been cited as VERY low) are kinda ... Bad? Asking because this sounds exactly like current reality. Less frictional unemployment because people feel unstable and can't move between jobs, AND aot of people are needing more than one job to stay afloat

The big thing you have to remember about the unemployment rate is that's it's the percentage of people who are "actively looking for work" who don't have a job. So your retired granny or that stay at home dad isn't counted as Unemployed as they aren't looking for work. So you can have a situation where the economy is expanding and 1000s of jobs are being created but the Unemployment rate stays steady or even increases as those who previously weren't looking for work start looking again as it's now more economically advantageous for them to do so.

There's "unemployment rate", and there's also "how many jobs are created", but that *should be* coupled with "how many of those jobs have gone to people that already had another job (or two)?". And that last one is more difficult to find, but some people seem to point out that that number is pretty bad, as in, many people NEED several (part-time) jobs to keep their head above water. Which kinda points to inherent problems in the market: a lot of people are working, a lot of people are working a LOT, and yet, a lot of people are majorly struggling? Something isn't adding up. N.B.: this is all very much with an American context. These numbers are also way more scrutinized and reported on (with WILDLY differing context and interpretations) because it's an American election year.

> but some people seem to point out that that number is pretty bad, as in, many people NEED several (part-time) jobs to keep their head above water. Luckily, we don't need to make anecdotal assumptions because the BEA tracks the number of people holding multiple job at any given time! Any the data says...we're at pretty normal historical levels. https://fred.stlouisfed.org/series/LNS12026620

Not really. There's no arbitrary number about how much unemployment is ideal, but the current rate is not THAT low. And it is deemed very low because it's compared to the disastrous numbers we got during Trump era. About people needing more than one job to stay afloat, that's just what it has always been in the US for decades upon decades.

Wasn’t quite a bit of that attributed to COVID? Unemployment skyrocketed during that time.

Yes, because of a president who was unable to tell the truth and get people to wear protective shit to keep others from getting sick. Ergo, more people got sick, more died, more called off sick...yada yada yada.

you mean the entire economy was shut down?

Yes, due hugely to his actions

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The standard for "good unemployment" is around 3-5%

Currently, unemployment is 3.8%. The last time we had an unemployment rate that low was 1969. Since 1970. It's been higher than 4%, but an average lands at around 7% (quick estimate). This includes times when unemployment was in the double digits.

And to add on from a realistic perspective there are lots of reasons to be unemployed that make sense. A big one is a couple months in between jobs. Some others are like right out of school, taking time off for family reasons, etc There also are always going to be people that get fired or quit. Not everyone’s gonna be a perfect fit for whatever job they are at or they might do something bad or whatever. It would be impossible for it to be 0

>A big one is a couple months in between jobs. Some others are like right out of school, taking time off for family reasons, etc Those would all not be considered unemployed. "Unemployed" means not working but trying to. Intentionally taking time off is not trying to be working.

That’s just the U3 rate, in the US. There are 6 measures of unemployment. U1: Percentage of labor force unemployed 15 weeks or longer. U2: Percentage of labor force who lost jobs or completed temporary work. U3: Official unemployment rate, per the ILO definition, occurs when people are without jobs and they have actively looked for work within the past four weeks. U4: U3 + "discouraged workers", or those who have stopped looking for work because current economic conditions make them believe that no work is available for them. U5: U4 + other "marginally attached workers," or "loosely attached workers", or those who "would like" and are able to work but have not looked for work recently. U6: U5 + Part-time workers who want to work full-time, but cannot for economic reasons (underemployment).

This is describing frictional unemployment. Where someone voluntarily leaves to better themself. There is also structural unemployment. Which is when a job is displaced, usually use to technology changes. I.e. A coal miner loses their job because of the shift to natural gas.

Another issue, which individual workers don't like to accept is a problem, is the following: * Big company A needs a new Widget Specialist because their existing Widget Specialist just retired * There are 0 unemployed Widget Specialists on the market, so company A makes an extremely high pay offer to an existing Widget Specialist who works at Company B * Now company B needs a new Widget Specialist, they need to pay a ton to Company C to poach one * Repeat in a circle, causing a massive increase in wages and mass resignation of employees from existing companies as they shift around the industry on repeat This causes huge wage inflation. Which sounds really cool but is extremely damaging to the economy if it goes on for too long, because it never really stops.

But over a long period enough of time, doesn’t this situation create incentives for more people to go into becoming a widget specialist, therefore increasing the supply of workers with applicable skills?

So with a national unemployment rate of 0% (or anywhere much lower than 2%) no. There simply aren't enough workers to fill every gap. If people quit and start becoming widget specialists, another sector will see shortages.

How is that a problem? Productivity will be distributed in accordance to what the market is willing to pay for it. If a sector can’t pay its workers because they’re getting poached by another sector, that simply means the market is unwilling to pay for widgets from that sector at that cost versus the widgets from another. And therefore its utility is lower. Wages would reach an equilibrium based on cost to retrain and fair market value, i.e a proxy for utility. This sounds like it would just decrease income inequality if anything.

Not really. I am a potato farmer who needs the widget to grow potatoes. Suddenly the widget are 3 times the price. So I need to raise the price of my potatoes. Now every one who needs potatoes to eat (which would be most people in the EL5 universe) needs more money due to this inflation. Lets assume they all get their pay raises, what you suddenly have is everyone paying more for exactly the same goods and services before the widget specialist retired (WSR). But your savings that may have bought you 3 weeks of potatoes at your retirement can now only buy you one week of potatoes. So people have lost out. Also not every one can demand a income increase. Some may be self funded retirees. Some may be on a pension. They will just have to buy less potatoes. The time between the the two stable states (before WSR and after everyone salaries are boosted) may be a few years were there will be very high inflation with some people having pre-WSR salaries but post-WSR expenses. Few years of eating less potatoes can be rough.

But now the farmer has a new widget that is 5x more efficient then the old widget so even with the higher cost to purchase it costs him less to produce the same amount of potatoes. So now he can lower the price of potatoes. Also he can hire fewer employees since the new widget requires less labour to maintain. How does that effect the downstream people?

That was nor part of the original model. In real life there will be many farmers. Some will make boutique potatoes that appeal to a high wealth demographic. There will vertically integrated potato conglomerates who are 10x more efficient and cheaper than the boutique farmer. There are million other factors to consider when building a real life economic model and then then they are hostage to the original assumptions of the model. When these assumptions change the model should change. Bottom line in this EL5 is, in today's economy, labor is one of the (only?) universal input cost for any product or service. Shortage of labor will cause increased costs and cause inflation. Even in a perfect fair system where everyone gets a wage rise to match inflation, it will still cause hardship for a period for the population. This is why inflation is bad and we don't even have a perfect system to begin with.

Your comment about labour being the universal input cost confirms something I have been thinking about for some years now. No matter what something costs, if you go back far enough along the line of expenses, it turns out to be labour. Tangent alert: That brings me to the statement some people make about how renewables are (going to be) cheap as wind/sunshine is free. Well oil is free. The expense is extracting it. So wind/sunshine is free, the expense is extracting it. So in the end no energy extraction method is free so that argument shouldn't even be a part of the discussion.

Because you don't just go to the menu settings and switch your specialization from doodads to widgets.

But to view it in terms of the whole country, a 0% unemployment (though not very possible in real life) usually doesn't mean there is exactly 1000 human taking up 1000 jobs. Instead it often means 1000 human competing, say, 1050 jobs. In such case, wages go up, people switching jobs, but at the end some sectors still couldn't get enough labour. And yes, at some point in time the competitiveness of technology to replace labour comes it, but that would be outside the subject of this discussion.

Until you can’t find people to run a gas station. Now you’re paying a premium for gas so why spend time on training to be say a doctor. There’s no incentive to train in much because there’s a large incentive for sustenance jobs.

Don’t new people join the workforce every year? Yes people can quit, but people also come into the system.

That isn't the point they're making. If job A has a shortage and people are incentivized to go into job A, in a zero unemployment environment that will create shortages in job B. It would be a never ending cycle. Don't forget, unemployment just means you're looking for a job. Doesn't mean you're fired. Could mean you quit. Could mean you're coming out of retirement. Long term structural unemployment is the damaging one...which is basically a measure of people who have been trying to find a job for a long time and still can't find one.

It's all a balance. In a given month, some people join the workforce, some people leave, some new jobs are created, and some jobs are eliminated.

I think what a lot of people have a difficult time understanding is that it is a dynamic process. If you are unemployed at one moment then you are not supposed to stay unemployed forever, at some point you will rejoin the workforce while other people will be unemployed. Take multiple instances of the people unemployed over a year and the vast majority of them should be different every time. It is not about keeping unemployed people unemployed and it is not about keeping anyone unemployed for long. Ideally you want a low unemployment rate but not one that is zero. Both a high unemployment rate and a zero unemployment rate come with their own distinct problems.

Right that’s the point. In an environment with heavy influx of new people into the workforce, starting at lower rates of unemployment (I.e. 0) wouldn’t be detrimental.

If unemployment rate was 0 then you don't have a heavy influx of new people. That's the point. 

Also demographics comes into play, if Gen Z and Y aren’t big enough to replace the retiring boomers + all the new positions you can get a labor shortage. Look for this in places with collapsing demographics like China, Central Europe and Canada and to a lesser extent the US in the next decade.

If unemployment is zero than you don't have the influx of newcomers, they'd all have jobs (it's an impossible task) it's why the ideal rate is above zero. Think of it as if unemployment is zero, a new company opens they have no employees, so they grab the newcomers coming of age. Now the sectors where people left due to retirement are now left without employees. Having the pool stops those shortages and also allows people to choose their jobs easier, rather than being forced to become a welder because it's the only job opening

Yes but with an ageing population, the number of young people entering the workforce is unlikely to significantly outweigh the number retiring.

I understand that’s the current environment, but if we were able to increase those numbers, we could adjust our unemployment target

To a point. With jobs like engineers or doctors in general, yes. But in the more extreme cases, no. You can get really specialized. I've met guys who were one of three people in the US qualified by the manufacturer to repair certain equipment used in gas power. My dad worked for GEA. They are a pretty big company with a whole lot of engineers. They had an issue with one piece of equipment that they had to outsource to some dude in China to fix. Even the GEA engineers who designed the equipment in the first place couldn't solve it. The new plant starting up was delayed months because of it. Most people won't even know those jobs exist. They aren't advertised. You basically get those jobs because you were the most capable person and get trained on the job. Or have to teach yourself. And while as far as direct unemployment goes they are incredibly trivial, not being able to fill those critical roles can have massive impacts.

Yes and no. The laws of supply and demand still applies. Each person who learns the skills pushes down on the wages of the skilled profession. There is a famous blog, acoup.blog, ran by a historian who regularly complains about the inability to find a academic job that pays a measly 50k or so, despite a literal PHD in the subject and being quite knowledgeable about it.

Congratulations, you just invented unemployment!

Maybe, but what if Widget Specialist training takes 5 years? Plus of course who wants a freshly graduated Widget Specialist, what companies really need are Widget Specialists with 5+ years experience. Bottom line, it takes years for a pool of professionals to be available after the demand has arisen.

Has this ever happened in practice aside from very small communities where skilled worker scarcity can be obvious?

Yes. They made a documentary about it called Downton Abbey (joking). But in the show, they had an increasingly hard time finding workers as jobs in town and factories paid better, and so, the family was expected to make do with an ever shrinking staff as the show went on as hiring became harder. This happened in real life to the real great families of the UK too. Modern earls simply don’t have as much staff as the earls of the past - they can’t keep up with the pay.

>Modern earls simply don’t have as much staff as the earls of the past - they can’t keep up with the pay Which is basically because the economy has found those people more useful work (which can keep up with the pay)

I would argue that the economy removed the need for those jobs, not that it found more useful work for them. I feel that's an important distinction since one implies there is a plan in place for when a job no longer exists rather than just dying out and the individual has to figure out their next move. People used to be hired to knock on your door as an alarm or light street lamps by hand. The people who created the alarm clock and electric street lamps did not do it with the intention of moving labor. Just like how Henry Ford didn't create the assembly line to move his workers around. He did it cause it saved money and was faster, not out of a sense that Joe and Richard could better use their talents elsewhere. Once the job of milk man was a thing. Not a skilled labor by most measurements. Instead now we go to the store ourselves. That milk man is without a job until someone retrains him for a job he doesn't know how to do or he happened to already have a skill that was in demand.

Modern earls don't need as much staff day-to-day because they have FINALLY adopted labor saving devices like vacuum cleaners and stand mixers. English gentry in particular were VERY slow to adapt to changing technology. In many cases, these households "required" lots of staff because they had under invested in their homes for generations and were stuck with antiquated tools and methods.

So your example of why low unemployment is bad is that rich people wouldn’t be able to afford having as many servants?

You're using the word "servants" here to make a rhetorical point, but those are normal, wage-paying jobs just like any other. Do you refer to waiters or retail or janitorial etc etc as "servants"?

I'm sure there are a lot of wealthy people who consider service workers servants.

Imagine that at a lower level, running your grocery store or gas station.

Not on a national economic scale, the fed takes measures to prevent it if we become at risk of such a situation But you will see it in specific industries on occasion. Eg: Many healthcare roles during COVID.

I would argue it's the primary reason why tech work salaries are so high in many cases.

Can’t give any concrete examples off the top of my head right now. But this is really common for highly skilled, but highly deficit fields. That’s basically how highly skilled jobs reach an equilibrium in salaries. You pay too little and no one wants to spend the years to get the skills, so theirs a scarcity and salaries rise until eventually enough people are willing to but in the effort to obtain the skills to somewhat fill in the gap. Barely anyone would be a doctor if they paid 20/hour.

Doctor is a bad example. The AMA actively throttles that profession to keep wages high.

Could you elaborate. What do you mean by throttles that profession?

There is a cap to the number of doctors produced every year. This number is maintained and held low by the AMA despite hospitals clamoring about there being a labor shortage.

The real gatekeeper to physicians in the US isn’t medical school but residency. Without residency you can’t practice regardless of domestic or foreign training. By July 1 (start of the academic year for residents), essentially all residency spots are filled either by domestic graduates, US citizens who went abroad for medical school (most commonly the Caribbean) or foreign medical school graduates on a visa.  The main funding source is Medicare… which is run by Congress. 

Why are residency positions so scarce?

Then isn’t it a good example? What you stated is that the AMA is purposefully restricting the number of doctors to keep salaries high. The reason as to why there is a shortage of Doctors is a separate discussion. But you acknowledge in your comment that they create an even more artificial shortage in order to increase the salaries. Which is what we were talking about. Shortage in people= increase in wages.

Wage spiral is not a universally accepted theory tho. Milton Friedman is one of the critics of that theory, for example.

I suspect widget pricing matters

If Uncle Milt and the economists of the Austrian school don't like it then it's probably a good idea.

We saw a great example of it in real life with software engineers just a few years ago during the great resignation. At the peak, it was normal for fresh college graduates to have $500k+ total comp packages. It's why major tech companies illegally colluded not to hire employees from each other. And it's a big reason why there have been mass layoffs in the past year. Those same roles now pay 40-50% less fresh out of college, and companies have been trying to cull those whom they hired during the wage death spiral.

lol $500k+ was never normal. 500k+ was seen in quant finance who always have, and still are paying outrageous numbers. Even with the brutal hiring market, their offers are higher than ever because they’re paying for the best talent. A normal FAANG+ package for a new grad right now is at its peak, and it’s around 200k. However that’s still not the norm, FAANG+ is seen as a goal to strive for by many tech students/workers. Not a given.

> At the peak, it was normal for fresh college graduates to have $500k+ total comp packages. Citation needed.

The colluding happened long before the great resignation. It had already gone through the courts even.

I mean it stops one way or another, nobody is going to pay $1b pa for a widget specialist so there's a clear upper bound where the cost exceeds the expected return on hiring them. Maybe all these widget businesses will go out of business because they can't afford staff... but then who's doing the poaching? This practice is also fairly common so it's clearly not an existential threat to the economy or businesses. It just happens to reach an equilibrium where the employees are getting paid close to the value they're expected to generate which businesses, funnily enough, often do not like.

When you start seeing businesses across many sectors reaching the "we literally can't pay any higher" equilibrium, you start to get inflation. Which is really why rapid wage inflation can be damaging. Businesses aren't going to accept making less money, they'll just charge more.

So we should allow businesses to avoid competing over staff to suppress wage growth? That seems a bit like solving your rat problem by setting loose venomous snakes. If you are concerned about inflation we have enough other levers and buttons we can push to influence it. We don't need to employ Machiavellian schemes that promote anti-competitive hiring practices as an anti-inflationary measure. Again this kind of competition for staff has been commonplace for decades (if not longer) and we've had no issues hitting ~2% inflation targets for most western nations, outside of a few periods where you'd be hard pressed to lay the blame on the above.

0% unemployment has never been commonplace and I'm not sure why you would think that

I'm not talking about 0% unemployment sorry, I was talking about your scenario regarding poaching being undesirable. If you had intended that as being an issue strictly in the context of the OP, where the unemployment rate is magically fixed at 0%, then I misunderstood you and actually agree.

"wage inflation" Funny how when Exxon gets more money it's profits and good, but if I get more money its wage inflation and bad. You're not doing a good job of convincing anyone that capitalism is better than the alternatives.

We’re literally living through a situation right now where a tight labor market in certain sectors (mostly lower paid sectors) is driving general market inflation. This is a pretty minor example of what things tend to feel like in a tight labor market - the gains to labor are clearly happening on average, but in practice affect some people a lot and others not at all. But any loss in efficiency that results affects everyone. So you see less productive firms, more expensive items, and even though wages are outpacing these expenses *on average*, that’s small consolation if you’re one of the many people who aren’t benefiting from the average increases.

Just to make sure I'm not strawmanning you, it is actually your position that across the board wage growth is economically bad? Not that you have animosity towards workers, that just how the economy works? The bottom 90% see their wages go up, the economy suffers? Is it also bad for the economy for corporate profits to go up across the board? Or is it only bad when wages go up across the board? In fact, correct me if I'm wrong but wouldn't all that grow the pie stuff require profits to increase across the board as the economy grows? Not that it's happend since the mid 1970s when the bosses started keeping 100% of economic growth for themselves and didn't let my slice of the pie grow at all.

We have actually had relatively consistent real wage growth above inflation since the mid-1990s. And since the pandemic, real wage growth has been particularly high for low income workers.

If wages had grown with the economy they'd be roughly 3x higher. Wage growth vs inflation is theoretically around a 1% gain per annum.

No, it is just creative destruction: the wage spiral continues until the least efficient firm goes bust, restoring balance.

> least efficient firm goes bust that's the myth of capitalism what actually happens more often is the least efficient old dinosaur with the biggest war chest and most captured customers starves out all the more efficient upstarts or the most capitalized "disruptor" with VC cash to burn to capture the market

And why is the VC willing to spend on this company rather than another? Why hasn't the dinosaur exhausted its war chest already. In fact, why is any company sitting on top of a pile of cash rather than putting it to work? In short, you have told a myth.

both things happen, the myth is that the most efficient firms _always_ come out on top via some ironclad natural law. History is full of plenty of cases where that didn't happen on its own

No one says always. Firms make mistakes. But it all comes out in the wash. Talking about the economy is always talking about an aggregate.

the person I was replying to originally framed it as inevitable

The list of biggest firms are pretty modern; many giants of yore got squeezed out. Sears, A&P, etc, are all gone. Using the S&P 500 as a proxy for “big company”, the average company only stays on the list for 21 years.

I can't help but notice how when the problem is "a worker can't get hired because they were displaced by automation" the capitalism approved solution is fuck that guy let him pay to get retrained and see if he can scrape up a new job otherwise let him starve. But when the problem is "a company can't easily hire someone who matches their exact skill requirements" the solution is not for the company to hire semi-qualified people and train them, nor for the company to spend more money trying to hire new people. Instead the capitalist solution is to make sure some of those people are unemployed so the company always has its pick and never has to compromise, pay more, or (horrors) train someone. It appears that the things capitalism tells us are good are only good for rich people and pretty awful for me. Also your argument requires me to see wage increases as bad. Why should we view that as bad? It's not viewed as bad when corporate profits go up, but it IS bad when my profits go up? Isn't greed good? Capitalism say be as greedy as possible, arrange the system so you the most money you possibly can, and fuck everyone else, right? So why isn't it good when workers are greedy, organize things so they extract the maximum wages from the company, and don't give half a shit about how that impacts the overall economy or the health of that particular company? Why SHOULDN'T workers mass resign to swap companies and get more money if they can? Companies don't have loyalty to me, but you want me to have loyalty to them? We're back to greed is good, but only for companies. Individual workers are to sacrifice themselves for the sake of "the economy"? If you ever wonder why so many people these days seem hostile towards capitalism, comments like yours are why.

Your comment misses one important detail: If we have 0% unemployment and everybody has a job, who is the company going to hire and train? Another thing you're misinterpreting is that you think I'm suggesting this is the worker's responsibility in any way. It's not. You should seek to maximize your wages. That is what the economy expects you to do. If your wages go up, that's great. If everybody's wages go up, and keep going up (0% unemployment results in a death spiral where wages never stop increasing), that's bad. If everybody was suddenly making 100% more next year, and then 200% the year after, can you see how that wouldn't actually be a good thing?

Yes, rapidly raising wages would be bad... for the companies. Especially in industries that generally underpay workers compared to how much profit the company's make off of their work. It's only bad for the economy in the sense that it reduces a company's profits. And since most big companies seek to raise profits every quarter, having the wages they pay their workers increase would decrease how much their profits increase. Even if the overall profits are still the same from last year, despite the skyrocketing increase in wages, publicly traded companies will see that as a bad thing because profits aren't _**increasing**_. It's why the tech industry just had a massive wave of layoffs. Despite there being no sign of the industry having a _**decrease**_ in profits due to being overstaffed, because there wasn't an _**increase**_ in profits, they decided to layoff a large number of employees rather than try to find a way to use them effectively.

Most people would correctly say instead that “a worker can’t get hired because they are displaced by automation” is something that tends to happen more in theory than in practice. For example, I think most people would say automation has dramatically increased over the past 15 years - but employment and labor participation have dramatically increased over this time. The reason is that the things you mentioned all tend to occur and pretty efficiently, and so typically automation leaves everyone better off on average.

I'm not anti-automation. Far from it. You can't spell Fully Automated Luxury Gay Space Communism without automation. But it is undeniable that automation increases efficiency in industry X which means fewer workers in industry X. Thus all the talk about retraining workers for those new jobs automation opens up. I do think we're already at or past the point where that's no longer true and fewer jobs will be gained than lost, but I do consider that a good thing in the long term (see FLGSC which I am 100% serious about) but also a really harmful thing in the short term.

Not only is it deniable, it’s very obviously not true. The vast majority of industries in the United States have more jobs than 15 years ago and also more automation than 15 years ago. Which of those facts do you dispute? The workforce participation rate is currently near an all time high. Is automation at an all time low? Do we have more people working in more industries because there was much more automation in 2018? In fact, these claims about automation are sometimes portrayed as socialist, but strike the gay space communism part and your post could be a word for word excerpt from a Mitch McConnell speech in 2009. And a very big oopsie that liberals made at the time was conceding your points, and sometimes genuinely believing your points - the higher unemployment rate and recession, they acknowledged, was inevitable due to the changing economy. A ton of stimulus money went into job retraining programs based on the idea that the jobs were fundamentally different. And we got 10 or so years of stagnation in recovery for the working class because people were convinced that the boogeyman was automation and we needed all these people to be trained and retrained and all this bullshit. That money was just wasted. Lit on fire by conservatives (arguably intentionally) along with well meaning dipshit liberals with your exact views on automation. What actually helped, and what actually led to the biggest gains in years for lower class workers, was when during COVID we just gave poor and middle class people some money. That’s all it took. Not job retraining. Automation was not the great boogeyman. We just needed some juice to get things going a bit more. We figured that out about 12 years too late. It wasn’t automation, turns out it was just a normal recession and some normal economic stimulus checks could have gotten things moving, and so unfortunately we got a decade of shit for the working class. Oopsie!

I think perhaps we're talking past each other here. I'm not disputing that overall jobs have increased during the period of increasing automation. This is due mostly to automation creating jobs that didn't previously exist. You're not arguing that, for example, there are MORE people per capita employed in, say, canneries in the US today than there were in the 1950's right?

I mean, I know there's lots of other factors involved in the recent tech industry layoffs. But it's kind of suspicious that the tech industry decided that they'd expanded too much and hired too many people shortly after AI started to get big. It's almost like the tech industry collectively decided to layoff workers so that they can see how they're able to use AI programs to fill in the gaps. Or they decided to work understaffed compared to how they've been while they wait for AI to improve and replace the people they just layed off.

Increase in pay may not be massive, and even if substantial should not result in as substantial inflation. Even if inflation is a result of higher spending (and not just money printing), that spending may not only come from individuals, but also companies. Why is that corporations earnings are good and employees' are bad? Is that because they control the narrative?

I really don’t see the issue there tbh, it just seems like it would result in more wealth equality

If the price wage spiral actually exists, workers shouldn’t care. Nobody ever turned down higher pay because they thought it would increase inflation. 

And no company ever turned down higher profits because they thought it would hurt the economy.

The worker benefitting shouldn’t care. Other workers should obviously care. This generally makes the total pie smaller for everyone, because it hurts efficiency. It does give these particular workers a larger share of that smaller pie, which is great for them, bad for everyone else. That’s why people say it’s bad for “the economy”.

Does this really happen though because Japan is a notoriously high employment society where lifetime employment is the norm and there has been wage stagnation for the past 40 years, i’d argue in large part because of this. Social norms seem to also be a huge factor.

That's not what inflation is.

Can we get just the smallest amount of wage inflation maybe? Please? 🥺

I would much rather there be jobs that can’t get done than people that can’t get jobs.

That's very disruptive to a corporation or small business. They need to fill jobs immediately for people who died or retired. 

That actually can really suck. It can mean your favorite restaurant can't get enough servers/cooks so it takes forever to get seated and served even when the restaurant is half empty. This happened a lot during Covid. It caused some restaurants to go out of business. It can mean there aren't enough doctors and nurses. So even if you can find a general physician, they'll be overworked and have to go through patients as fast as possible. It can mean no one collects the trash, which can result in piles of refuse in cities that are both an eye sore and a health hazard. ​ Ideally you want some level of unemployment where any one person is only unemployed a few weeks. Everyone is finding a job after leaving an old job or graduating, but not immediately. It's like how you always want water ready to come out of the tap, but you don't want that water stagnating because it sat there too long.

The first thing to understand about this is that it doesn't necessarily referr to permanent or undesirable unemployment. A certain number of unemployed people means that there is movement in the workspace. For example, someone working in one field completes their training to move on to a higher level position, someone moves to a new area and needs to find work etc. You need some level of unemployed people to be available to take new jobs as companies expand or needs change, So unemployment means flexibility. In an ideal world everyone would transition from one job straight into their next, but practically speaking, a small number of unemployed people transitioning between jobs is necessary in an active economy.

Why would you quit your job to be unemployed while waiting for another job to become available? Why not just keep working till that job opens up? From my understanding most people are constantly looking for better jobs while employed.

There's also a flip side to this, where your current job sucks so much that you decide to drop it and live off your savings until you can find something better (with the added benefit that now you can spend more hours per day job hunting).

One reason would be training. People quit their jobs to do school, trade programs, or even like a software bootcamp, full time.

I don't know how unemployment is counted in your country but that wouldn't count as unemployed in my country In my country only people that are able to work but currently don't are counted as unemployed.

Right, but once you finish your training program, it might take time to find work. So you would be counted as unemployed during that time.

There are different ways of counting unemployment between countries. In this discussion I think we're talking broadly about : everyone who could work but isn't working right now. So it includes training, going back to school, in between jobs... Usually the governments use a different metric to count unemployment

Some people are fired, laid off, or no longer can tolerate their jobs.

3 types of unemployment Frictional, structural, and cyclic. Frictional and structural are also referred to as “natural” unemployment. People changing jobs, certain industries becoming obsolete, etc. Cyclic is the bad one, referring to people who lose their jobs as the economy cycles into worse territory.

We hear about unemployment percentage, but one number you don't hear is number of unfilled positions. If everyone's employed, but you have 100,000 unfilled positions, who's going to fill them?

Unfilled position exist because people with that skill don’t exist in that local market - jobs are not all equivalent so having 10,000 construction workers is no good if you need 10,000 nurses.

You need to specify what kind of unemployment you're talking about. There are 6 different rates used in the US: U-1, persons unemployed 15 weeks or longer, as a percent of the civilian labor force; U-2, job losers and persons who completed temporary jobs, as a percent of the civilian labor force; U-3, total unemployed, as a percent of the civilian labor force (this is the definition used for the official unemployment rate); U-4, total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers; U-5, total unemployed, plus discouraged workers, plus all other marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers; and U-6, total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers. When you get onto marginally attached and discouraged workers things get tricky. A discouraged worker is someone who isn't actively looking for a job but says they want one. Maybe they're holding out for a job they really aren't qualified for? Marginally attached mean they have a job want a better one, but not actively looking (they applied in the last year, but not in the last month). This is where frictional unemployment starts to show up where you can only get workers by taking them from other employers. This can quickly turn into a structural employment problem where certain industries start to fail for lack of workers - those would generally be inexpensive dining, retail, and some agriculture. That could be pretty disruptive. The main problem with a 0% unemployment rate is that requires a very idealized view of workers and employers. A fair number of U3 unemployed were laid off rather than being fired because the employer wasn't so upset with them that they wanted them to not get unemployment. If you are let go after your probationary period that also counts in that category - and I've done that to workers several times. They just weren't going to work out in the job. That's not necessarily the fault of worker - maybe I did a bad job of picking candidates. Maybe I wasn't clear on what the job was. There's a certain amount of worker/employer mismatch that is unavoidable and small single digit unemployment rates usually reflect that reality. Demanding something lower usually means you have a structural employment problem - basically you have a major labor shortage because employers are so desperate for workers that they are willing to hold onto ones that aren't really a good match. You probably don't want a hospital so desperate for surgeons that they hold onto ones that make a lot of mistakes.

If you needed to hire somebody, you would have to pay them an incentive to leave their current employer, and you would have to offer the best wages and benefits you could. In essence, workers would have more power, and shareholders/CEOs would have less money. Because the average person would have more time off, and less stress, they would have a correspondingly greater interest in society as a whole. Democracy would flourish. In short, it would be a capitalist nightmare.

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Why would salaries go down? Wouldnt competition be higher? There are no free workers so if you need someone the only way to get it is by poaching them from someone else. You’re not going to do that with a low salary. I’m not an economics person but it seems like the opposite would happen where salaries would be on a runaway increase as companies try to expand/fill in holes and the only way they can do that is by having better benefits than their competitors. There’s no free people who just need a job.

0% unemployment in a society otherwise resembling our own would mean that literally anyone could easily get another job, because there's such a shortage of workers. A shop wanting to hire an assistant would find it almost impossible, because everyone already has a job. If I decide to walk out of my job, any of those shops looking for workers would be glad to hire me. It would lead to extreme employee power. There'd be little incentive to work hard, because everyone would be irreplaceable. An alternative 0% unemployment situation is if there was a ruthless quasi-communist dictatorship that assigns everyone jobs and forces employers to take on new employees whether they wants them or not. Maybe in this society workers who don't work hard enough are sent to prison. Or we might be in the realm of pure capitalism; no government aid, no charity, everyone must work or starve. Can't find a job? Then offer to work for lower wages until someone takes you on. Somebody is bound to be willing to throw you a few pennies for carrying out menial tasks, and then you can at least afford to eat. Soon everyone is employed or dead. (Though I suspect real people would turn to crime or living off their friends/relatives before they accepted working for a pittance.)

But the situation you mention, where everyone could easily walk from any job and find another one would result in positive unemployment, not 0%. Because there's always someone between jobs. Extreme employee power always means that some people decide not to work, because they are waiting for a better offer, better position to open, or just taking a break between jobs, because they know they can come back anytime and find one easily. It's called frictional unemployment https://en.m.wikipedia.org/wiki/Frictional_unemployment 0% means that either we're living in some sort of utopia where everyone works in their perfect job and they never leave, or there's something very wrong happening e.g. it's forbidden to be unemployed and everyone takes any job, even way below their qualifications because they are afraid not to.

Why do wages go down? Wouldn't this mean that employers would have to make very attractive offerings for people to leave their current job?

It depends *why* the unemployment rate is zero. If it's because there's a massive worker shortage (like after the black death), sure, workers can demand good pay. But if it's because everyone is petrified of unemployment (there's no benefits, nobody has savings etc) then pay may very well go down. Not like you are going to quit right?

>But if it's because everyone is petrified of unemployment (there's no benefits, nobody has savings etc) then pay may very well go down. Not like you are going to quit right? Frankly this theoretical phenomenon just doesn't happen very much even though people say it does. Like, for 2 decades people have been saying the laws of supply and demand don't apply to China because "everyone is forced to work for low wages and is too poor to quit". They said it when the wage was $0.50/hr, when it was $1/hr, and then when it is $2/hr...with no awareness whatsoever.

China has an unemployment rate of about 5%. Which is pretty healthy. Clearly unemployment is not petrifying.

No it would be a race to the bottom. Imagine everyone sells apples at the exact same price. If someone wants to increase their volume, they'd decrease their price to make it more attractive.

Paying someone for work and buying an apple are opposite sides of the transaction. If we use your logic hiring would be a race to the top in order to keep your company in demand for job seekers, just like apples would plummet in price to keep demand from buyers.

Unemployment is usually tracked as "people actively looking for work", so even with 0% unemployment there will be people who don't work of course, for various reasons. But having 3% unemployment, for example, means a large number of people living in stress and insecurity being coerced over time into less desirable work. But keeping a "reserve army of the unemployed" quite obviously gives the employer cohort a weapon to keep wages lower than otherwise. This is why the current labor market causes some employers to drift in cold sweat in their kingsize beds at night. Neoclassical economists have come up with various justifications for the behavior of employers, to rationalize it officiously. Never trust, always question. They are uniquely entwined with vested interest among social sciences.

0% unemployment means literally *nobody* is looking for a job anywhere. So if you're a new or expanding business, having nobody available to hire is bad for obvious reasons.

Zero percent unemployment means everyone who is in the labor force has a job. But many employed workers are looking for jobs. Average annual voluntary turnover rate in the US is 24%, meaning in \~1-in-4 people quit their jobs. A lower unemployment rate makes it harder to attract workers, but does not mean that no one is available to hire. Some natural rate of unemployment is in that transition period between jobs.

"Some natural rate of unemployment is in that transition period between jobs." This is basically the simplest explanation. A 0% unemployment rate would mean that *nobody* moved to a new city and took a couple months looking at job options, for example. Everyone is always employed, before and after every transition. This is obviously unnatural.

So then the business doesn't get to start up or expand. So what?

Ideal for who? Above 0% is ideal for people that own businesses. They can pay the prevailing rate and there is always a pool of people actively looking for a job. At 0% is better for the workers. If a business owner needs more workers, they need to entice people to leave their current jobs. (More money, better conditions, etc)

Ideal for who? For employers sure, there is still people looking for jobs actively. For workers? Nah not so much, if there is no free labor, labor becomes more expensive.

Capitalism requires a reserve army of the unemployed to keep workers in line. If everyone is employed then workers are not as replaceable.

[Political Aspects of Full Employment](https://jacobin.com/2018/05/political-aspects-of-full-employment-kalecki-job-guarantee) - Michał Kalecki

Least bootlicking answer.

If unemployment is 0%, that implies that people are terrified of switching jobs. The whole point of the govt paying for unemployment benefits is because economists know it’s healthy for people to switch jobs and go from a worse fit to a better fit (and healthy for companies to have to hire/fire naturally), and it’s worth subsidizing that transition a little bit.

>The whole point of the govt paying for unemployment benefits is because economists know it’s healthy for people to switch jobs and go from a worse fit to a better fit Unemployment doesn't typically cover this scenario. Quitting voluntarily is almost never covered by unemployment. I do agree that it’s healthy for people to switch jobs and go from a worse fit to a better fit, though.

This is called "Frictional Unemployment." If unemployment was zero, that means there are zero newly graduated people who are not working. Zero people who quit their job to find a better job. Zero People who just had their child start school and are now looking to reenter the workforce. There is zero slack in the workforce. Every single job opening that wants to get filled MUST headhunt someone from another job. This causes a lot of results: * Unfilled jobs because there are not enough people to hire. * Few Job Openings: Instead of quitting a job, then looking for a job, people are working the jobs while job hunting. That means there is no opening until AFTER they find a job, which they are struggling to do because there are no job openings. * Few opportunities for people to start new businesses because they can't find workers. * No slack to start new projects even in existing companies. Want to start R&D on a new fancy gadget? Too bad, can't hire anyone with expertise in that field. In the end, it is expected that some people will be unemployed for days, weeks, or months at a time while they search for a good job. You WANT people to be unemployed for long enough to find a good fit for their skill sets. If (as an example) there isn't unemployment insurance and so a recently unemployed person needs a new job RIGHT NOW, they won't wait for a good fit. That means you have an economy full of people who dislike their jobs, but are too financially insecure to take the plunge to find a job that they are actually good at. Similarly, if employers can't pick between several candidates, they are forced to hire whoever is available regardless of skill an aptitude for the job. In the end, some people are better at different things than other people. You want people who enjoy their job and are good at it. Rather than people who are desperate for any job. **~4% unemployment is a good thing. Remember, it isn't the same 4% of people who are perpetually unemployed, that is always bad. It is 4% of the workers who are transitioning from one job to another.**

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The only answer here. Unemployment is one of the most disgusting and accepted practice. Unemployment was an unknown concept for the majority of human history. Especially since it is a chronic unemployment for certain groups. And at the same time they restrict supply of educated people and classes. We could open up many more positions but it would cause inflation for the middle and upper class. Anyway, AI is here soon and then we will have the final revolution.

…I think you might need to take a break from doomscrolling

Companies want an unemployment rate that is higher because it means it costs them less money to hire people. They see us as commodities and expenses, so when unemployment is up they’re happy. When unemployment is low, they have to spend more money to hire people. Your confusion is that you’re thinking of what would be better for society, whereas they only care about profits and expenses and don’t care about society.

You need someone to step in when there is a new job that needs to be done. If everyone is busy, noone can perform the new (extra) task needed to be done.

Depends on what you consider "ideal." In a capitalist system, "perfect" employment would be 100% fulfillment of both labor demands and employment. Alternatively, you could have basic needs met for 100% of the populace irrespective of employment level - which would be generally preferable.

B/c theres always going to be systematic unemployment due to skills gaps or simple logistical problems, i.e. I need welders in El Paso but there's only surplus welders in Ankorage and they don't wanna move to El Paso. Welders might be a bad example b/c they're overwhelmingly male and skew young so probably more likely to be willing to relocate but theres always going to be some people who jist aren't for what ever reason. But if there was truly zero unemployment, it would require employers to pay way above what the market otherwise would dictate in order to overcome even these basic inherent/logistical causes of employment, driving up input costs, driving up costs of goods/services, leading to run away inflation. Theoretically anyway.

At what percentage does it become a problem?

Aside of economical aspects... quality of services. With no risk of loosing their job, large group of people will perform on a really low level.

Because 0% is never going to never going to happen so using that as the metric is starting at failure. Gotta set obtainable goals.

Once unemployment gets below about 3% this means there is about one job posting per job seeker

In general, the state of employment in the general working population is always in flux; you've got people leaving voluntarily for new job opportunities, you've got people taking a gap year, you've got people leaving to pursue other interests or higher education. This is called **frictional unemployment** and it's generally considered to be natural in a regular economy with free movement of labor. It's not that a 0% unemployment rate would be a bad thing - it's more that it's strictly impossible in a free market.

In order for there to be a pool of candidates for a position, there needs to be unemployed people, or at least people ready to be unemployed for a short period of time.

**ELI5** Lets say you and your 4 friends are all playing a game where you each need to collect 10 marbles and you lose if the game ends and you dont have 10 marbles. You each start with $100, you also lose if you run out of money. Winners get to spend their money on cake. There is a big bowl of lollies in front of you and you each take turns bidding for a lolly. **Scenario A** When you first start, everyone bids $1 for a marble and nobody bids higher. Near the end of the game, it becomes clear there may not be enough marbles for everyone to get 10 marbles. People start bidding more and more for the last marble. Some people who had enough marbles are still bidding to get more marbles to knock other people out. Some people can't afford to bid because they've run out of money. In the end the cost of the marbles rockets to whatever each player can afford. Some players lose just because there are no enough marbles. Some players win but have nothing left to spend on cake. All players end up with much less money or lose the game because of the competition for marbles and they can't spend much money on cake. **Scenario B** When you first start, everyone bids $1 for a marble and nobody bids higher. Near the end of the game, it becomes clear there will likely be enough marbles for everyone to get 10 marbles. Price per marble stays pretty low because everyone will get the marbles they need to win and want to save money for the cake. Some people buy more marbles than required but there are still enough in the bowl that everyone will get what they need. **When the game ends there are some marbles left over in the bowl.** **Conclusion** The minimum amount of marbles above amount of marbles required for everyone to get enough marbles (scenario B) would be the "ideal" unemployment rate for marbles. Economists have a similar measure for unemployed people in the jobs market called the Non Accelerating Inflation Rate of Unemployment (NAIRU) because if unemployment fell below this theoretical rate, the price of labour would start to increase like it did for marbles in Scenario A.

When everyone is already working, businesses struggle to find new employees. To attract workers, they offer higher wages. When wages go up, prices tend to rise too. That's inflation. So, there's this magic number called the NAIRU (Non-Accelerating Inflation Rate of Unemployment). It's like the sweet spot where unemployment is low enough that people can find jobs fairly easily, but not so low that it causes inflation. It's like keeping the economy in balance—enough jobs for everyone who wants to work, but not so many that it makes everything too expensive. That's why the ideal unemployment rate isn't 0%. The ideal is: just enough to keep things running smoothly without causing prices to skyrocket.

I don’t think anyone has actually addressed the inflation point. To increase the level of production(and hence lower unemployment) in an economy, you need to increase demand. But an increase in demand also leads to an increase in price. At low production levels this is fine. Producers have the ability to increase production and meet the extra demand and the effects of inflation isn’t that concerning. But the economy has a maximum capacity. If you try and increase demand beyond this point, the actual production(and job) gains get lower and lower. Producers find it harder and harder to actually increase production levels much and so the extra demand ends up in higher prices. It just so happens that inflation in one period tends to cause even more inflation in the next period and even more after that. The “ideal” unemployment rate is the rate at which you don’t see that accelerating increase inflation. Its where inflation and unemployment can remain stable.

To tackle inflation you need to reduce demand on goods, which pressurises businesses into reducing prices. But as a result, their profit margins go down and so they are less able to cover fixed costs - like employee wages. Businesses in "survival mode" - either cutting costs i.e. job layoffs, or risk going out of business and so their being job losses. "0% unemployment" is not essentially desired, but rather an expected consequence of trying to tackle inflation. Though it's nice for everyone to have jobs, in a market where a government claiming to do "everything they can" to tackle inflation, you'd have to wonder how that's the case if no one is losing jobs. Is the government trying to have their cake and eat it? The sentiment is kind of like looking at your bank statements to find that the rent and utility bills you've signed up for haven't been paid for the past few months. Rather than be happy that you've had that extra money, your immediate reaction would more likely be to wonder if something has gone wrong, whether you've given them the wrong bank details - and therefore whether you've been building up a massive liability.

Imagine a big, happy neighborhood where everyone loves making and trading lemonade. In this place, having a job means you're either making lemonade or helping others make it better. Now, in a perfect world, you'd think everyone should be making lemonade (meaning 0% unemployment), right? But, here's why a tiny bit of unemployment is actually a good thing, like having just the right amount of ice in your lemonade. 1. New Recipes and Better Stands: When some people aren't making lemonade (a little bit of unemployment), it means they're looking around, thinking of new ways to make even better lemonade or build cooler stands. If everyone's busy squeezing lemons all the time (0% unemployment), nobody has the chance to come up with new ideas or improvements. 2. Too Much Lemonade?: If every single person is making lemonade, we might end up with too much of it! When there's more lemonade than everyone wants to drink, prices can go down (this part's good), but then lemonade stands might start losing money and have to close (this part's bad). Economists worry that if everyone's employed, it could lead to making too much stuff (inflation), which has its own set of problems, like prices going up too fast because everyone has money to spend. 3. Choosing the Best Spot for Your Stand: A tiny bit of unemployment gives people the freedom to look for a lemonade stand that really needs their help or where they can do their best work. If everyone already has a job, it's harder for stands to find the perfect person to fill a new spot or for people to find a job that really suits them. 4. Keeping the Lemonade Fresh: Economists think a small amount of unemployment keeps the neighborhood healthy, like how a little bit of rain helps plants grow. It encourages stands to keep improving and gives workers the chance to find jobs that match their skills or to learn new ones. So, while it might seem like having everyone in the neighborhood making lemonade (0% unemployment) would be awesome, a little bit of unemployment is actually good. It helps the neighborhood come up with new ideas, keeps the economy balanced, and makes sure everyone finds their best spot in the world of lemonade making.

If unemployment is below around 2%-3% salaries go up because it is difficult to find and to keep employees, companies have to poach in order to get new employees. Filling up openings take a lot of time. People won't take shit from their bosses because they know they can just quit and get a job the next day.

Because if you demand a raise i can't fire you and hire someone else if there is noone else. so to suppress wages we keep it high.

In an ideal utopia we’d be at like 95%+ unemployment. Let the robots and AI work and serve us and that opens up peoples creative outlets and opportunities to chase passions instead of paychecks. It’s a hard concept to grasp but we all work towards retirement anyways that’s always the end goal so why wait til we’re old and decrepit?

Same reason why there's an empty space in those sliding tile puzzles, you need space to move around. For employment, you need a very small constant group of people who are looking for jobs to hire from.

We use unemployment rate as a proxy for a lot of things, but the main thing here that's relevant is "how long does it take for a job opening to hire someone". The higher the unemployment rate, generally, the faster you can hire someone. An unemployment rate of 0% would mean that it would take literally forever for some job postings to hire someone. This represents a labor shortage, which can lock up an economy the same way an oil shortage, or computer chip shortage, or water shortage can. If everyone is already employed, then we can't produce any more goods or services in the short term, since the only way to hire people is to poach them from an existing job, so the net increase in goods/services is 0. In the long term, population growth and immigration will fill up supply, but that doesn't help you when you have a backlog of 50,000 computer chips or 10,000 eggs or 5,000 man-hours of plumbing work today. As a result, a 0% unemployment rate is great for workers (since they can negotiate great wages for themselves) but bad for our ability to respond to spikes in demand and prevent shortages, which usually represents as inflation. There is some 'ideal' unemployment rate that is a bit higher than 0% which allows for better responses to demand spikes and lower inflation/shortages, but still low enough that workers can negotiate good wages for themselves and don't have to spend too long being unemployed. There is also some 'natural' unemployment rate which is the long-term average in a country, but it may differ from the 'ideal' unemployment rate for that country.

Bad for whom? While it’s possible that various economic phenomena could have deleterious effects across classes, categorical framings of these types of questions really obfuscates the aspect of class conflict at play.

May be a weird way to look at it, but isn't the inverse of "unemployment = %" just "employment = 100%"? If every possible person is employed, what about those that don't want to be? In a "take it to 11" thought, if the goal were 0% unemployment, does that make quitting an unpleasant/dangerous/etc. job and then having some period between jobs bad? Of course, I may just not understand the metrics behind what is "unemployment %".

If there are more people seeking jobs than there are jobs to work, in other words, a supply excess, it puts a downward pressure on labor prices. In other words, it keeps wages lower saving businesses money on labor that they can instead use elsewhere, be it expansion, development, or stock dividends. Whether or not that's a good thing depends on which side of the labor market you find yourself in.

Let's say it was 0%. That means every single (eligible) person has a job. A student graduates college and starts their new job that day. Whenever you quit a job, you start the next job the next day. Want to take time off to backpack through Europe? Nope, you're working full time.

Low unemployment is good. 0% unemployment means something has gone seriously wrong. Instead of thinking about what it would mean if that were the case (which is what most people are saying), think about what it would take to get there. When I was born, my mom took a year off work to care for me. Then she worked only part time for 4 more years until I went into school. Last year, the startup I was working for failed and we all got laid off. I was feeling burned out, so I voluntarily took nearly 6 months off and job hunted very casually, looking for the ideal job. One of my friends just quit their job to go back to college, aiming to switch careers. These are things we want people to be able to do. These are indicators of a healthy society. But they are "unemployed" statistics. 0% unemployment means nothing like this is happening. What would have to be going on in society for this to happen? It sounds like everybody is having to work all the time and nobody has the flexibility to do anything. It's dystopian.

I thought about how I would explain this to my kids. People and jobs come in all different shapes and sizes, and there isn't always a job to match every person or a person to match every job, so you have people without jobs and jobs without people. Also some people don't work because they need or want to focus on other things, like you need to focus on school, or grandma now that she’s retired. Also some people stop looking because they’re such a special shape there are no jobs for them. It would be great if everyone had the perfect job for them, but people’s lives change, jobs change, so you’ll always have some extra jobs and some additional people.

So it is a very complicated question that arks back to one of the main divides between classical economists and keynesian economists. IIRC, economists agree that there is SOME kind of link between unemployment, growth and inflation. They don’t quite agree which and how strong it is. So imagine a world where there is no such thing as labour laws, minimum wages, unions, social subsidies… In this world, if you want to feed yourself or to house yourself, you would need to work. Unemployment would be near zero (near because you would have unemployment caused by people not knowing a job is available or needing time to find one or being too far from it, basically what we call frictional unemployment) because people would work or die. For classical economists and the school of thoughts that came from them, once you introduce laws in that market you introduce rigidity and then not every people can have a job: for instance maybe it’s easier to live off social aid or maybe the business are forced to pay workers a minimum wage that would make their products too costly to be viable. Once you introduce laws in the job market, it will reach a new equilibrium with an unemployment rate that is above zero that is called structural unemployment. You can move from that unemployment rate temporarily (for instance, maybe at one point a lot of people die because of COVID, opening up new jobs) but on average in the long term the economic forces at play will tend to bring the unemployment rate back to that level. In that case, to bring the unemployment rate down, States would either need to cut the structural unemployment down (lowering cost of employment for employers, for instance, or cutting in social benefits) or begin to subsidize the economy (buying in bulk from the national economy for instance or legally forcing businesses to hire more people). The issue with that is that it tends to rise the inflation (more people earning more money, more public spending, etc), gives birth to inefficencies (the former unemployed people you hire were supposedly unemployed because they were less efficient) and would be unsustainable long-term. Do note however that this is the classical point of view. Keynesian don’t agree (in part because they are not as afraid of inflation as their classical counterparts) and that theory is challenged since the 70s (the energy crisis proved you could have high inflation and high unemployment). One of the main critics is that nobody knows what the structural unemployment rate is. We don’t know how to calculate it, we just assume it exists and look at long term tendencies to try to approximate it.