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The Fed’s goal is in fact to promote maximum employment, and a non-zero unemployment rate is necessary for that: https://www.federalreserve.gov/faqs/money_12848

The Fed’s goal is in fact to promote maximum employment, and a non-zero unemployment rate is necessary for that: https://www.federalreserve.gov/faqs/money_12848.htm https://www.federalreserve.gov/faqs/money_12848.htm Related to the discussion on insecurity, it is a good outcome to have an economy where people quit jobs and spent months on a careful job search. 0% unemployment means that nobody does that.

vkou 6y ago
The link fails to argue for why it is necessary for that. Instead, it just says that's the fed's mission. > it is a good outcome to have an economy It's a good outcome for employers, not employees. If I can quit my job in the morning and get one I'm happy with before lunch, that's good for me - but it also means that employers are desperate for labour. A sober, careful, multi-month job search is not a good thing for most people. They can't afford it, because they have bills to pay this month, not next year.
- nl 6y ago
  > It's a good outcome for employers, not employees. If I can quit my job in the morning and get one I'm happy with before lunch, that's good for me - but it also means that employers are desperate for labour. > A sober, careful, multi-month job search is not a good thing for most people. They can't afford it, because they have bills to pay this month, not next year. Your first case (quit and get a job before lunch) is bad for the economy because it means production is constrained by the availability of labor. That is bad for employees even in the short term because it forced employers to find alternatives. I agree a multi-month job search is a bad thing, and I absolutely agree that avoiding that should be a goal of economic policy. Low, non-zero unemployment addresses this well: if there are many people spending multiple months on job searches then unemployment rises.
  - vkou 6y ago
    Production being constrained by the availability of labour doesn't mean one whit to me. I don't benefit from increased national production. The overwhelming majority of my expenses go towards things that aren't constrained by national production. Employers always want to find alternatives to paying people for their labour. That's also not my problem. It's an incredibly weird argument to be making. Employers need a thumb placed on their side of the scale, because otherwise... The country will produce fewer goods then it otherwise would? And because otherwise, they'll seek to reduce their costs, by employing fewer people? They are always motivated to do that anyways, and they are in a much worse position to do it than if they could trivially fire and replace their workforce, and if they are slower at accumulating profits.

vkou 6y ago

The link fails to argue for why it is necessary for that. Instead, it just says that's the fed's mission. > it is a good outcome to have an economy It's a good outcome for employers, not employees. If I can quit my job in the morning and get one I'm happy with before lunch, that's good for me - but it also means that employers are desperate for labour. A sober, careful, multi-month job search is not a good thing for most people. They can't afford it, because they have bills to pay this month, not next year.

nl 6y ago
> It's a good outcome for employers, not employees. If I can quit my job in the morning and get one I'm happy with before lunch, that's good for me - but it also means that employers are desperate for labour. > A sober, careful, multi-month job search is not a good thing for most people. They can't afford it, because they have bills to pay this month, not next year. Your first case (quit and get a job before lunch) is bad for the economy because it means production is constrained by the availability of labor. That is bad for employees even in the short term because it forced employers to find alternatives. I agree a multi-month job search is a bad thing, and I absolutely agree that avoiding that should be a goal of economic policy. Low, non-zero unemployment addresses this well: if there are many people spending multiple months on job searches then unemployment rises.
- vkou 6y ago
  Production being constrained by the availability of labour doesn't mean one whit to me. I don't benefit from increased national production. The overwhelming majority of my expenses go towards things that aren't constrained by national production. Employers always want to find alternatives to paying people for their labour. That's also not my problem. It's an incredibly weird argument to be making. Employers need a thumb placed on their side of the scale, because otherwise... The country will produce fewer goods then it otherwise would? And because otherwise, they'll seek to reduce their costs, by employing fewer people? They are always motivated to do that anyways, and they are in a much worse position to do it than if they could trivially fire and replace their workforce, and if they are slower at accumulating profits.