During my last year of high school and first year of University, I did some classes on economics. At some point during that time I learned the shocking fact that unemployment is desirable, economically speaking, the state of full employment is dire and Bad Things Happen.

What kind of bad things? Well, things like inflation; full employment causes wage inflation, which causes inflation in general (i.e if wages go up, the cost of products go up). But it can also lead to people leaving menial jobs because of better opportunities. And no-one wants that.

So governments generally desire to maintain about 4% unemployment, this is a particular kind of unemployment called structural unemployment. It is the mismatch between job seekers and jobs available.

Ah, glad you asked. Well, in Skylines there is no inflation to worry about. But you may have noticed that educated cims get this funny idea in their heads that they are too good to work at the local pig farm and so they go work in a nice shiny office instead.

But if there is a healthy level of unemployment then they will be forced to work at the pig farm whether they like it or not. In fact, these menial jobs only get abandoned if your city reaches that dire state of full employment. Actually because cims don't enjoy great workplace mobility, you need to maintain a state of full employment for a while before those jobs will abandon.

You may have noticed that if you provide low density commercial with a lot of services early in the game, it ran rapidly level up to lvl3 and then find itself unable to find educated workers and proceed to abandon. Actually this can happen with high density commercial, industry and office too, but the very modest service requirements for low density commercial makes it more obvious.

So it is possible that a building will get "not enough workers" because while there are enough unemployed workers in the city, there are not enough unemployed educated workers to fill the educated slots.

In Skylines, there is no such thing as workplace experience. An uneducated cim is simply incapable of ever filling a job slot above his education level. On the other hand an educated cim can fill any job slot at or below his education level. Graduates are perfectly "happy" working at the local pig farm or lumberyard, oh sure, they'll drag their feet and try to find a nicer job first, but they will take menial jobs and they will stick with them for their entire life if they have to. Cims can upgrade from a poor job to a better job, but don't seem to be allowed to quit a bad job and become unemployed.

Highly educated cims are happy to take demeaning jobs

I am making this point right here, because some players like to maintain an uneducated work force; but really this only makes things harder and introduces another source of possible problems. Graduates are completely flexible and can perform any job, in contrast the uneducated cim is entirely inflexible and can only perform uneducated jobs. Educating everyone will make life easier for you.

In Simcity 4, the headline was Full Employment without Enjoyment, in Skylines Chirpy is such a nuisance I have him permanently turned off so I honestly don't know if your cims provide an informative tweet warning about this dire state. But it's bad and we know to avoid it now.

Happily it's pretty easy to prevent by just keeping an eye on the demand bars

It really is that simple! Just use up the residential demand more aggressively than the commercial and industrial/office demand. Basically zone more residential, and less of the other zones, than you normally would. The worst state is the full green bar because then your commerce and industry is screaming for more employees to occupy vacant job slots.

The other very useful tool, is the Population View, as it gives you the actual unemployment percentage and this should be considered the ultimate authority:

You should strive to maintain at least 4% unemployment at all times, meaning try not to fall under 4%, but higher is fine. The demand bars are not completely reliable, so if in doubt check the population view to find out if it's a good time for some industrial expansion. If the population view shows your unemployment percentage is healthy you may disregard the demand bars.

Finally you can also use the "Employment Percentage" graph under City Statistics to track your past employment percentage.

So far I have striven to keep the advice simple to follow. Unfortunately, if you follow the advice to the letter you will get death waves! In fact, the advice can even make death waves worse (although likely no worse than normal). If you maintain a high unemployment you can easily ride death waves, but by understanding the cause of Death Waves it is possible to reduce their intensity.

This section may be harder to follow and to put it into practice requires greater attention to the population view and city statistic graphs. It is included for the benefit of advanced players who wish to minimize Death Waves.

For the most part residential demand is based on unemployment alone, if you have low unemployment you will tend to have high residential demand.

To understand what happens with a death wave, you need to understand the life cycle of a cim. For more on this topic refer to this thread:
https://forum.paradoxplaza.com/forum/index.php?threads/the-short-life-and-random-death-of-cims.899207/

But the most pertinent part of the lifecycle is as follows:

• A large number of adults move into the city, they immediately set about making babies, and have 2-3 babies per family. These babies grow up to children, then teenagers. The stage is now set for the death wave to unfold, and the following events all happen in about 1 year.
  
• First teenagers grow up to Young Adults, this causes a large increase in workforce availability, increased unemployment, and reduced residential demand.
  
• Next the parents retire, this causes a reduction in workforce availability and reduced unemployment, however because each set of parents has at least 2 children there is still a larger workforce than there was before the teenagers grew up.
  
• Next, the Young Adults, fed up with living in the attic/basement/closet, decide to move out, if there is no room in the city to start a new family (which is probable because it's choked with old people), they leave the city. This is called the YA Exodus Wave, worker availability plummets, unemployment falls to very low levels and residential demand soars in response to the lack of workers.
  
• Finally the seniors die, freeing up space for new families and promoting immigration, yet even though there are lots of vacancies and lots of immigration, residential demand is still sky-high because of low unemployment.

The crux of the matter is the unfortunate timing, first the parents retire, next the young adults leave the city enmasse because there is no room for them in the city causing even more severe employment problems, finally their parents die freeing up space. So you get two periods of workforce reduction - through retirement and exodus, and two periods of population reduction - through exodus and death. This creates enormous demand for workers and residential, and this is like a vacuum which sucks in a huge wave of immigration.

If you do nothing at all the death wave is self-propagating, because the seniors all die at about the same time, then are replaced by a fresh wave of immigrant adults.

However, if you responded to the high residential demand in a natural way by zoning new residential, then you get a double whammy of influx - firstly the families moving into the space freed up by the dead seniors, secondly the families moving into your new residential zoning. Congratulations, you've just intensified a death wave! To avoid doing so, you have to keep your cool when you identify this situation, and just watch the situation unfold without zoning any new residential.

Broadly speaking, following these two rules will dampen death waves:

• Avoid zoning residential before, during or after a death wave. While there will be high residential demand, it will actually go away by itself and you will see heavy immigration even if you zone nothing new.
  
• After a death wave has happened you can largely cancel out the next one; aggressively create jobs for the Young Adult worker boom - do is even at the expense of causing "not enough workers" zots, then aggressively zone residential when the adults start to retire, creating space for the YA population to move into.

If you follow these principles then death waves will be largely corrected.

Or even more simply:

• Avoid zoning residential during periods of heavy population loss by death. Wait for the freed up residential slots to fill before resuming fresh zoning.
  
• Do zone residential during retirement waves, when the elder percentage climbs above 20% it is a good time to bring in fresh adults. This will also help make room for the soon to leave home Young Adults, retaining them in the work force.

The ultimate goal is to have steady influx, observing the influx graph will help you to know if you need to be zoning more or less residential. If you zone carefully and steadily you shouldn't have death waves to begin with, but now you also know how to avoid intensifying them.

As far as I can tell, you can have at least 15% unemployment with no observable harmful effects at all. At that point your population will tend to stop growing, but as you zone new employment opportunities immigration will very quickly resume. In order to get problematic levels of unemployment you'd have to do something extreme like dezoning all your workplaces, otherwise unemployment self-stabilizes by suppressing immigration.

The advice of maintaining unemployment is really about preventing existing industry from abandoning and wont magically prevent all "not enough worker" zots. Cims are terribly reluctant to take industrial jobs (with the exception of lvl3 industry). However, they will take these jobs eventually! It just means you need to be patient when establishing new industry later in the game.
Cims have quite high "inertia", they tend to stay in their current job - or state of unemployment. This means it is hard to establish new industry, but once established it should be reasonably robust.
I also tend to find that it is easier to establish new industry when you have high influx (i.e. a lot of immigration), but industry will always establish itself eventually provided there are unemployed cims even if some of the buildings go through a couple of abandonment cycles before finally being established.

This can happen due to what is called a Retirement Wave or a Young Adult Exodus Wave. It can be that all the workers are nearly the same age because they all immigrated or graduated at the same time as the specialized industry was looking for workers. Then they reach the next phase of their life and all leave the city or retire at the same time and suddenly the building has no workers. This is kind of hard to avoid completely, but if you zone the specialized industry incrementally over several years then only small portions will abandon at any one time. Otherwise just wait for the industry to find new employees.

This could be related to traffic problems. Demand for commercial and industry depends to an extent on them being able to sell goods, if your transportation network is clogged up with a lot of delivery vans and trucks getting de-spawned then your existing industry and commercial won't be profitable and demand will fall.

As far as I can tell it has no negative effects on the city morale. A building suffering from not enough workers still pays tax income and for most intents and purposes is the same as a properly functioning building and these buildings still stimulate residential demand and immigration just like "healthy" buildings do, making them a wonderful thing for rapid growth. While they eventually abandon this is normally of little concern for industry as industry hardly cares about land value and the abandoned building will soon be replaced with a new building.

Not nessecarily, although I believe monitoring unemployment and the population view does improve one's game. It results in a residential-heavy city and residential is one of the poorer ways to make tax income, the cream of the city is generally commercial,office and lvl3 industry. The usual goal of employment stability is to enable specialized industry even in a mature city yet specialized industry itself is of dubious benefit - normally a combination of lvl3 Generic Industry and Industrial Space Planning to make imports go further is difficult to improve upon.
Nevertheless any downsides are slight and near-absolute jobs stability is a nice thing to have so I would not hesitate to recommend this employment management strategy to any player, whether playing for flavor of to build an optimally running city.
The exception is if you want to grow your city as fast as possible, in which case you should aggressively use up all demand immediately, while there will be rampant "not enough workers" the city will grow extremely fast, generate huge tax income and have no problems with death waves.

Please leave a comment if you found this guide helpful, or disagreed or think this guide can be improved. I strive for maximum accuracy and constructive feedback is always welcome!