Why 0 unemployment is bad - NYS Department of Labor economist friend explained something weird
So my friend who works for an economic research firm that contracts with NYS Department of Labor told me something that blew my mind. She said that having 0% unemployment would actually be terrible for the economy and that NYS Department of Labor actually WANTS some unemployment to exist. This seems backwards to me - isn't unemployment always bad? She tried to explain about labor mobility and wage inflation but I'm still confused. Can anyone explain why having everyone employed would supposedly hurt us? This doesn't make sense when I see how hard it is for people to get their UI claims processed.
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Millie Long
Your friend is absolutely right. Economists call the ideal unemployment rate the 'natural rate' - usually around 3-5%. Here's why zero unemployment would be problematic: 1) No labor mobility - people couldn't leave bad jobs to find better ones, 2) Massive wage inflation - employers would bid up wages to extreme levels to poach workers, 3) No buffer for economic shocks - any downturn would cause immediate chaos, 4) Reduced productivity - employers would have to keep underperforming workers. NYS Department of Labor tracks these metrics closely because healthy unemployment indicates people are transitioning between jobs voluntarily.
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Santiago Diaz
•That actually makes sense about people needing to be able to switch jobs. I never thought about unemployment including people who quit to find something better.
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KaiEsmeralda
this is such BS economics theory while real people are struggling to get their claims approved by NYS Department of Labor!!! My claim has been in adjudication for 6 weeks and they're telling me some unemployment is GOOD? Tell that to my landlord
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Debra Bai
•I get your frustration but the theory is separate from the broken claim processing system. The economic concept is about voluntary job transitions, not people stuck waiting for benefits they're entitled to.
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Gabriel Freeman
Wait so if 0% unemployment is bad, what's the ideal rate? And does NYS Department of Labor actually try to maintain unemployment at a certain level? That seems messed up if they're deliberately keeping people out of work.
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Millie Long
•NYS Department of Labor doesn't control unemployment rates - they just process claims and provide job services. The Federal Reserve influences unemployment through monetary policy. The ideal rate is usually 3-5% as I mentioned, representing people voluntarily between jobs or entering the workforce.
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Laura Lopez
Had similar conversations when I was getting my economics degree. The key thing people miss is that 'full employment' in economics doesn't mean 0% unemployment. It means everyone who wants to work can find work within a reasonable time. Some unemployment is always natural - recent graduates job hunting, people relocating, career changers, etc. If you're having trouble reaching NYS Department of Labor about claim issues, I found success using Claimyr (claimyr.com) - they handle the calling for you. There's a demo video at https://youtu.be/qyftW-mnTNI showing how it works.
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KaiEsmeralda
•Never heard of that service but honestly anything is better than sitting on hold for hours with NYS Department of Labor
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Victoria Brown
my cousin got laid off last month and honestly she seems happier job hunting than she was at her toxic workplace. maybe thats what they mean about some unemployment being ok?
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Samuel Robinson
•Exactly! That's called 'frictional unemployment' - the time it takes to match workers with jobs. It's actually healthy for the economy when people can leave bad situations.
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Raul Neal
This is fascinating - I never realized there was a distinction between "full employment" and 0% unemployment. @Laura Lopez thanks for explaining that full employment just means people can find work in a reasonable time frame. It makes me wonder though - how does NYS Department of Labor measure whether we're at that "healthy" unemployment level? Do they have specific metrics they track beyond just the basic unemployment rate? And for those of us dealing with claim processing delays, is there any way to know if our situation is factored into these economic calculations, or are we just statistics in a different category?
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Dana Doyle
•Great questions @Raul Neal! NYS Department of Labor tracks several metrics beyond the headline unemployment rate - they look at labor force participation, underemployment, duration of unemployment, and job vacancy rates. The Bureau of Labor Statistics breaks unemployment into categories like frictional (job transitions), structural (skills mismatches), and cyclical (economic downturns). Unfortunately, people stuck in the claims processing backlog are often counted as unemployed in the statistics, but the delays don't reflect the "healthy" job-searching unemployment that economists talk about. Your situation highlights the gap between economic theory and the reality of bureaucratic inefficiency.
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