Zero Unemployment Rate – Possibility and Effects

Zero Unemployment Rate - Possibility & Effects

We all know that the unemployment rate is currently quite high. However, you may not know that there is a very real possibility of achieving zero unemployment in the near future. While this may sound too good to be true, several factors favor this goal. This post will explore both the possibility and effects of achieving zero unemployment.

What is meant by the zero unemployment rate?

The zero unemployment rate is the theoretical point where all individuals in the workforce are employed. The zero unemployment rate would come about if all those seeking work found it and if no workers chose to work more hours than they already do. It’s not likely that this state will ever be reached because economic cycles push employment rates up or down, people seek out better jobs, look for part-time non-work to supplement income, etc.

Effects of zero unemployment rate If zero unemployment were achieved, there would be many much-documented effects felt by society as a whole:

  • All businesses would need to change their business model since no one would be unemployed – therefore spending less money on payrolls.
  • There would need to be an overhaul of social security programs because no one would be unemployed long enough to qualify for benefits.
  • Not only businesses but also the government would need to change the way taxes are levied because zero unemployment would mean zero income taxes.
  • All workers that have zero employment must have zero expenses; therefore, it’s likely zero employment rate could bring about zero inflation rates.
  • Zero unemployment means everyone is being paid, so union members wouldn’t have any reason to strike or go on strike – thus zero bargaining power for unions. 
  • No more “unemployed” category in surveys so data collected by governments may become inaccurate, leading to ineffective policymaking.
  • There are both positive and negative effects on society if zero unemployment were achieved. The massive restructuring of society that zero unemployment would bring about is likely to cause both positive and negative effects on society.
  • There are zero unemployed people with zero employment rate, so zero working hours would need to be implemented. 
  • Since zero unemployment would mean zero income taxes, governments may seek alternative revenue streams. This could lead to higher sales or value-added taxes.

Why may zero unemployment not be achieved?

Possible zero unemployment means all workers have jobs – but this creates some major problems:-

  • Governments will need to increase the number of workers dedicated to monitoring fraud resulting from everyone being employed since no one can longer claim benefits as they do now.
  • All basic research monies may go towards the commercialization of new patents rather than investment in basic research which potentially has no immediate commercial benefit. 
  • Large periods of zero unemployment would likely lead to zero inflation and zero economic growth due to an economy operating at full capacity with no additional room for expansion.
  • If the zero employment rate were achieved, it may be difficult for new businesses to start because future entrepreneurs would need to compete with “full employment” business owners who have zero risk of going out of business.
  • There is evidence of this so-called paradox in the US during the great depression and in Europe since the mid-2000s, but zero unemployment is not the norm even in some of the poorest countries on earth.
  • There will always be people who seek better employment opportunities than they currently have. If zero unemployment were achieved, it’s likely these workers would leave their current jobs to take a chance on getting something new & better 
  • Some studies prove that zero employment rates don’t exist – no matter where you look, such as Japan and Germany, which show evidence of zero unemployment during times of full capacity due to extensive social programs designed to encourage people into work. 
  • The concept of zero unemployment is criticized by economists because it assumes there are enough jobs for everyone. No one can know this for sure, so we can’t say zero unemployment is possible.

Some Practical Examples

Many companies in the tech sector are recruiting only when they have zero employees – zero staff means zero attrition which means zero new hires. 

Procter & Gamble, one of the world’s largest consumer goods companies with over $65 billion in sales, has added zero positions in each of their last nine quarters, indicating an increasing “no hire” attitude in anticipation that business will remain strong for some time to come.

Even in areas with no formal hiring freezes or policies, applicants are told they can expect zero new hires for at least 6-12 months after completing the interview process.

The Government Shutdown of 2013 resulted in no paychecks delivered to 800,000 federal workers, and zero government services were available to the public resulting in zero customers for local businesses and zero sales. Many small business owners expressed concern that sales will remain zero or decline for several months.

Areas Impacted by Zero Unemployment Rate

Some areas which would be greatly impacted by zero unemployment rate:

Areas Impacted by Zero Unemployment Rate
  • Manufacturing – Zero workers mean zero output so that actual production could be much lower than 100% capacity.
  • Services Industry – Employees who don’t work cannot shop, so shopping center traffic would certainly drop well below 100% capacity levels. 
  • Government Agencies and Services – If no one worked, there’d be no income tax revenue, social security payments, 911 support, police/fire protection, and many other government functions would stop entirely.
  • Education Sector – All teachers currently working could not replace those close to retirement age; zero retirees means zero replacement of older workers, zero turnovers in the education sector. 
  • Construction – Zero construction workers, would mean zero new housing starts or repairs.
  • Agriculture Sector – Zero field workers means no crops harvested and animals fed.


In a world where technology and robots are taking over more jobs, the idea of having no unemployment sounds appealing. But, what would be some possible effects? Would we need to find other ways for people to make money? How should our society change to support this lifestyle? 

We can help you answer these questions to know what your company will look like 10 or 20 years from now. Contact us if you want a free consultation with an expert who can discuss how digital marketing strategies may have changed by then, as well as any new opportunities available today.

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