Washington ESD - is it desirable to pursue a goal of zero unemployment? Economic theory vs reality

That makes sense. I guess if literally everyone HAD to work immediately, people would be stuck in bad jobs with no leverage to find better ones.

Exactly! Plus seasonal workers, students, people caring for family members - there are legitimate reasons people aren't working at any given time.

It's not about making excuses - it's about understanding how labor markets actually function. Even in the best economies, you'll have 3-4% unemployment from people transitioning.

ok but why can't we just make the transition faster? like better job matching or something

Wait wouldn't higher wages be good for workers though? I don't understand why that's automatically bad.

Higher wages are great, but if everyone's wages go up 20% overnight, prices go up 20% too and you're back where you started, just with bigger numbers.

That's a really good point about inflation I hadn't considered. So it's kind of a balancing act?

this!! unemployment benefits exist for a reason - to give people time to find good matches instead of just grabbing whatever

Exactly - that's the 'frictional unemployment' economists talk about. It serves a real purpose in helping people find jobs that match their skills.

maybe that's not such a bad thing? government could focus on useful stuff like infrastructure instead of whatever makes the most profit

That's actually been tried in various forms - results have been mixed at best. Central planning has a pretty poor track record for efficiency.

Plus government job programs tend to become permanent even when they're not needed anymore. Creates its own bureaucratic momentum.

That's a fascinating point. We might need to rethink the whole concept of full employment as technology advances.

Yeah, that's something I wonder about too. Maybe the goal should be meaningful employment for those who want it, not just any employment.

lol fair point. hard to think about ideal unemployment rates when you can't even get your claim processed

True, though I think understanding the theory helps explain why unemployment systems exist in the first place.

That's counterintuitive but makes sense. You need some slack in the system for mobility to work.

So having some unemployment actually protects worker rights? That's wild to think about.

Yeah, it's one of those cases where the obvious answer (everyone working = good) isn't actually optimal when you think it through.

Yes! NAIRU is exactly what I was getting at earlier. It's not that we want unemployment, it's that some level is inevitable and even necessary for economic stability.

ok but who decides what the 'natural' rate is? sounds convenient for people who benefit from having desperate workers around

It's not really decided, it's observed from historical data about when inflation starts accelerating. But you're right to be skeptical of any 'natural' economic claims.

Japan got close in the late 1980s - unemployment hit like 2.1%. Led to massive asset bubbles and economic distortions that took decades to unwind.

Some Eastern European countries under communism claimed zero unemployment, but that was mostly through hiding unemployment in make-work programs. Not really the same thing.

So the real-world examples seem to support the theory that it's not sustainable?

That's actually a much more nuanced and realistic policy goal. Focus on the people who are really struggling rather than chasing an arbitrary number.

Yeah, someone choosing to take a few months off between jobs is totally different from someone who can't find work at all.

Exactly - distinguishing between voluntary and involuntary unemployment is crucial for good policy making.

UBI is interesting because it could potentially reduce involuntary unemployment while still maintaining the flexibility benefits of having some people out of work at any given time.

yeah I could see that working better than just trying to force everyone into jobs

That's an interesting connection I hadn't thought of. UBI as a way to make unemployment less painful rather than eliminating it entirely.