Coffee Break

Unemployment Is Down, And That’s Bad News For Bosses

Politicians love it when unemployment falls. With more people in work, tax revenues go up, and there are fewer social problems to worry about. But for businesses, low unemployment is actually a bad thing.

You see, when unemployment is high, businesses have their pick of the crop. If they’re not totally happy with one particular candidate, there’s bound to be another somewhere who is more suited to the job. But when unemployment is low, they’ve got less choice and have to spend more money if they want to find the right person.

There’s another cost of low unemployment too: wages. When unemployment is low, workers are in a better bargaining position according to If they don’t like the job they’re at right now, there’s nothing to stop them from hopping over to another company that will gladly eat up their services.


As tells its readers in a recent article, the cost of hiring new employees is high when unemployment is low. We’ve seen this sort of thing in the artificial intelligence industry of late. Google, Facebook, Amazon and Salesforce are all hiring hordes of AI experts to help them develop their next generation systems. But the number of actual AI specialists in the world is relatively small – around 5,000. Thus, for many of these tech companies, the result has been skyrocketing wages. Entry-level AI researchers can expect to get six-figure salaries, right off the bat.

Some companies, including Google, have had to go a step further to secure the talent that they need. The company has recently been buying up entire university research departments in the hope that this will give it the edge in the international AI market. Whether it will or not remains to be seen.


The fall in unemployment, especially in tech and engineering sectors, has meant that bosses have had to become more creative. You can see this “creativity” everywhere at the head offices of the big tech companies. They’re not so much offices anymore but playgrounds designed to satisfy the whims of their workers. The whole atmosphere of these places is decidedly playful, and one wonders how these companies manage to get anything done.


Workers who find themselves in the enviable position of being in demand from lots of companies are given pretty much whatever they want. If they want a squash court on site, they’ll get it. If they want a massage therapist to get rid of their aches and pains, then they’ll have that too. Google has even started installing slides between worker’s desks and the canteen, allowing its employees to literally slide down to the canteen for their lunch.

How much longer this sort of thing can continue is anybody’s guess, but it’s clear that what’s happening in some sectors is breaking the mold of employee-employer relations. We’re used to a world of high unemployment where bosses have lots of power, and individual workers don’t. But if the high demand for tech workers becomes high demand in other industries, this could herald a complete reversal in the traditional relationship between firms and households.