The concept of full employment, and what it means for wages, explained
The unemployment rate ticked down to a nine year low of 6.2 per cent in August, approaching what economists refer to as “full employment.”
So what is full employment? It’s the lowest rate of unemployment before a scarcity of job seekers starts to inflate wages and hit the economy.
Economists disagree on exactly what that unemployment rate is, but Maurice Mazerolle at Ryerson University’s Ted Rogers School of Management says it’s somewhere between five and six per cent.
“When you start pushing it down below six per cent, this is when you start seeing lots of job openings…there’s lot’s of turnover, lot of movement, people are finding it hard to hold on to employees because they’ve got other options,” he said.