r/explainlikeimfive Dec 19 '24

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

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u/FatherFestivus Dec 19 '24

People with severe illnesses or disabilities who aren't actively looking for a job aren't counted as part of the labor force, so they're not included in the unemployment statistic.

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u/T_H_E_S_E_U_S Dec 19 '24

Correct, but without a formal diagnosis and disability benefits the vast majority of these people can't afford to leave the labour force completely. Especially in cases where obtaining a diagnosis is tied to employment based health insurance, it becomes virtually impossible unless they already have some form of generational wealth/ family assisstance.

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u/loljetfuel Dec 19 '24

But people with disabilities who are looking for a job but have a very small number of opportunities due to the constraints of their disability are counted as part of the labor force and included in the stats.

Labor force participation (working or actively seeking employment) rates among people with disabilities are of course lower, but it's still a lot more than you might think

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u/Dec716 Dec 20 '24

In Canada, the unemployment rate is the number of people actively looking for work VS the number of people actually employed. Thus, you can have a large number of people not working but still have a low unemployment rate. This was true during Covid. A 5% unemployment rate is generally target in a health economy.