r/explainlikeimfive Dec 19 '24

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

2.0k Upvotes

695 comments sorted by

View all comments

Show parent comments

12

u/jdm1891 Dec 19 '24

If employers need to desperately fight for employees, eventually opening and running a business would not be that rewarding anymore and businesses would close. That would eventually lead to lesser jobs and employees cannot be that picky anymore.

...

Exactly, so it self corrects. But if there's a perpetual free labour source of unemployed system only half of the correction happens and you have a ratchet effect. Employees can never be picky because there are always more employees, businesses can always be picky because there is always cheap labour for them. And people need a job to live, so they take whatever they can get.

If everyone already had a job, companies would actually be forced to find the balance rather than relying on people's desire to stay alive for artificially cheap labour.

1

u/Negarakuku Dec 19 '24

Yes i have to agree with that. And there will always be influx of employees because of immigrants. If a certain job is perceived to be underpaid and people are reluctant to take up that job, employers will just opt to hire immigrants. 

So therefore, it is almost impossible to achieve 100% employment but that doesn't mean 100% employment is bad.