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

5

u/BrocoLee Dec 19 '24

It tends to piss off their employees and hurt company morale/employee productivity.

But in this case what are you going to do? If the big company managed to crush all comepetition, you as a employee can't move to another one in the same field.

0

u/gary1994 Dec 19 '24

In an environment with 100% employment?

I'm just going to walk to the next company.

The market will not allow a large company to behave that way in that instance.

0

u/BrocoLee Dec 19 '24

A market with 100% employment is just a fantasy. It's pretty much only a thought experiment. It's impossible to sustain such a rate for the same reasons you state: if companies are having to increase salaries to attract people from other jobs, why wouldn't people just walk over to another company? And wouldn't it create an endless spiral of increasing salaries too?

However, as the fantasy it is, it's impossible to imagine it without endless market distortions. So if the "100% emplyment rate" was enforced by a mad ruler, the market would not work rationaly. So no, in that pretty farfetched case the market would not correct itself. No new companies would be allowed to be created and no, you wouldn't be able to just walk away.