Unemployment Reduces Inflationary Pressure Economists generally consider 6 to 6.5 percent to be the nation's long-term, underlying jobless rate, below which it is difficult to reduce unemployment without causing inflationary pressures. It deflates wages and therefore increases profits. When there are unemployed people willing to work, workers will not make inordinate demands for higher wages for fear that cheaper labor will replace them. Thus, even unionized labor becomes relatively docile when unemployment is high. The Benefits of Full Employment Full employment offers benefits that go beyond the gains of the previously unemployed, who are afforded an opportunity to work.
Full employment provides workers with significant power over their wages and conditions of work.
This power shift operates both on the individual and the collective level. The ease of finding an alternative job, and the difficulty of replacing a worker who leaves, gives the individual worker bargaining power. In unionized workplaces, the workers' ultimate weapon, the strike, is much more effective when labor markets are tight. The changed power relation produced by full employment makes it possible for workers significantly to alter working conditions to meet their needs. Job safety issues can be effectively taken up.