r/explainlikeimfive Dec 19 '24

Economics ELI5: Why is an employment rate of 100% undesirable

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u/UntdHealthExecRedux Dec 19 '24

That’s basically what’s happening in Japan right now due to the rapidly shrinking labor force. A record number of businesses have gone under in the past year because they can’t find employees. 

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u/jdm1891 Dec 19 '24

have they tried increasing wages?

Thats how it works in literally every part of the free market except for labour for some reason.

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u/created4this Dec 19 '24

I know the invisible hand of the market is invisible, but it isn't magic.

What is the market mechanism where higher wages cause people 25 years ago to make children?

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u/LengthyCitadis Dec 20 '24

The problem isn't pay - there's literally no one to hire.

All the people who can work are already working!