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Why did unemployment remain high even for people who wanted to work during the Great Depression?

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A long line of unemployed men in coats and hats stands outside a soup kitchen in Chicago, with a storefront sign reading Free Soup, Coffee and Doughnuts for the Unemployed. — Great Depression Unemployed men standing in line outside a soup kitchen, Chicago.

During the Great Depression, unemployment remained high for those willing to work primarily due to a catastrophic collapse in aggregate demand and a severe contraction of the money supply.12

The economic downturn was fueled by a cycle of declining production and spending. Following the stock market crash of 1929, both consumers and businesses lost confidence, leading to drastic cuts in spending and investment. This was compounded by widespread banking panics, which caused numerous bank failures, disrupted lending, and reduced the funds available to finance business operations.321

Furthermore, the Federal Reserve exacerbated the crisis by allowing the money supply to shrink and raising interest rates. Because of widespread deflation, people expected future wages and profits to fall, which discouraged borrowing and further stifled economic activity. Consequently, businesses lacked the capital and the consumer demand necessary to maintain production or hire workers, leaving millions of people who wanted to work without employment.123