At a 0% unemployment, you cannot growth the capital stock by simply putting more workers into the economy. That would require population growth, which the developed economies rarely do. The only way to achieve growth of the capital stock in value terms is to redirect workers from luxury goods production to capital goods. The luxury goods sector is squeezed from the other end by ultra-high working class wages, which requires workers to be redirected into mass consumption production.
That is the long-term effect. The short term effect is that with 0% unemployment, you will pretty much instantly see unionisation come to dominate the economy.
Even if you don’t see formal unionization, the simple fact that there isn’t someone more desperate for work forces a pretty high minimum standard for working conditions. As things stand with the 5% unemployment rate western nations target, the floor on working conditions is what’s legally required, as there will always be someone willing to accept work for those terms. With 0% unemployment the worker can more or less choose what terms they’ll accept, with or without formalized collective labor power.
Can you expand on this? Is it due to the increased bargaining power of the workers, or something else? Genuinely curious.
At a 0% unemployment, you cannot growth the capital stock by simply putting more workers into the economy. That would require population growth, which the developed economies rarely do. The only way to achieve growth of the capital stock in value terms is to redirect workers from luxury goods production to capital goods. The luxury goods sector is squeezed from the other end by ultra-high working class wages, which requires workers to be redirected into mass consumption production.
That is the long-term effect. The short term effect is that with 0% unemployment, you will pretty much instantly see unionisation come to dominate the economy.
Even if you don’t see formal unionization, the simple fact that there isn’t someone more desperate for work forces a pretty high minimum standard for working conditions. As things stand with the 5% unemployment rate western nations target, the floor on working conditions is what’s legally required, as there will always be someone willing to accept work for those terms. With 0% unemployment the worker can more or less choose what terms they’ll accept, with or without formalized collective labor power.