There will always be some unemployment due to a couple of reasons. First, frictional unemployment means there will always be people transitioning jobs and it takes time for them to find the right fit, so they will account for unemployment. Second, if there’s more labor supplied than demanded, this causes unemployment by what’s called structural unemployment. Lastly, job search causes unemployment by leaving laid-off workers having to find not just any job but one that will fit their skills. A public policy that affects the unemployment rate is raising the minimum wage above the equilibrium point of labor demanded and labor supplied. This is negative because it leaves people who would be willing to accept the lower wage out of work and also causes inflation.
Unions affect the rate of unemployment by raising wages for union workers and therefore causing a surplus in labor, leaving some without work. This means that those working are better off but those who aren’t are worse off.
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