THE FIGHT FOR FULL EMPLOYMENT: ARE WE THERE YET?

Just a few days ago, the Bureau of Labor Statistics (BLS) released its most recent monthly Jobs Report. The Report’s top line is that the economy generated 143,000 during the month of January and that the unemployment rate came in at the relatively low level of 4.0%. Since January 1948, the monthly unemployment has dipped to 4% or below less than 20% of the time.

Indeed, when the aggregate unemployment rate drops to 4% or below, you can expect to hear analysts, policymakers, mainstream economists, and commentators asking once again whether the U.S. is at “full employment.”

You can expect them to ask and answer the question:

Are we there yet?

ARE WE THERE YET?

Well, are we?

The answer to that query, of course, critically depends on how one defines “there”— that is, what really matters is the meaning that one gives to the very notion of full employment.

Amongst mainstream economists, the consensus is that “full employment” is the lowest level of unemployment the economy can sustain while maintaining a stable rate of inflation.

Economists technically define full employment as any time a country has a jobless rate equal or below what is known as the “non-accelerating inflation rate of unemployment,” which goes by the soporific acronym NAIRU

If the unemployment rate drops below this threshold or “natural” rate, then the economy is “too hot,” and the result is upward pressure on prices.

In contrast, if the aggregate unemployment rate gets “too high,” then the economy is “too cold,” resulting in a slowdown in economic activity and a recession or possibly even a depression.

According to this logic, the trick is to find that sweet point where the labor market is neither “too hot” nor “too cold.”

In other words, the challenge is for the labor market to settle at the “optimal” level of joblessness, to operate at that level of unemployment that’ll key inflation at bay.

And, make no mistake about it, most mainstream economists consider our current rate of unemployment— 4%— to be at, or very close to, full employment.

Take, for instance, recent comments by Austan Goolsbee, economist and President of the Chicago Federal Reserve Bank:

To me, it really feels like it shows we're settling into something like full employment, and that's a better spot to be than the one we were at, let's say, six months ago, where unemployment was just creeping up and creeping up.

It’s important to make clear that this definition of full employment— that rate of unemployment that’ll keep inflation at bay— does NOT mean that everyone who wants a full time gig is able to find one.

To put it bluntly, mainstream economists accept, even if reluctantly, that a certain percentage of the civilian labor force must always be jobless if the economy is to “settle in” a situation of full employment.

If you go back and take another peek at the BLS’s Jobs Report, one of things you’ll find is this: At the economy’s current unemployment rate of 4%—something most mainstream economists would consider “full employment”— there’s still almost 7 million persons who wanted but were unable to secure employment.

Thus, the most widely accepted definition of “full employment” within mainstream economics is one that countenances the presence of millions who search but are unable to secure employment.

A PROGRESSIVE ALTERNATIVE

Political progressives, racial justice advocates, and human rights activists have long advanced a vision of “full employment” that’s radically different from that proffered by mainstream economists [for an excellent overview of the understanding of “full employment” advanced by progressive forces, click here or here]. The proponents of this different and progressive conception of “full employment” employed the language of human rights to ground their claim that economic justice required public policies that guaranteed jobs at living wages to all those able, ready, and willing to work.

For advocates of this particular understanding, “full employment,” unlike the concept that has come to dominate much of the mainstream economics profession, is the absence of involuntary joblessness. It is a conception that does not countenance tolerate the presence of millions who searched for, but were unable to secure, jobs consistent with human dignity. Indeed, as alluded to above, those advocating this particular conception of full employment actively agitated for a policy regime wherein the federal government stood at the ready to use its powers to ensure or guarantee jobs to all those who desired jobs but were unable to secure them in the private sector [For a lucid and detailed discussion on how this would work, click here or here or here or here].

In this regard, it’s worthwhile remembering that Dr. Martin Luther King, Jr.— along with such others as A. Phillip Randolph, Bayard Rustin, Coretta Scott King, and the Humphrey-Hawkins Full Employment and Balanced Growth Act of 1978— centered the demand for guaranteed jobs at livable wages within their overall agitation for economic justice. It was also, by the way, part of the Black Panther Party’s Ten Point Program, as well as the 1968 Poor People’s Campaign and, more recently, Black Lives Matter.

WRAPPING UP: NO WE AIN’T “THERE” YET!

So, judged by the criterion of “full employment” employed by many progressives and human rights activists, the answer to that question— “Are we ‘there’ yet”— is unambiguous: No, we ain’t there yet.

Even at the relatively low aggregate rate of 4%, there’s still almost 7 million persons who reported wanting but being able to secure employment. In addition, the most recent Jobs Report also estimates 4.5 million persons are working part-time involuntarily— that is, they’re working part-time because they can’t find a full-time job. And there’s an additional 5.6 million persons who reported wanting a job but not actively looking— a group that’s considered “out of the labor force” and therefore not counted in the “official” unemployment stats.

None of this means that progress has not been made or that the labor market is not in better shape than it was, say, during the heights of the pandemic.

What it does mean is that there is much to be done before we can claim that we’re experiencing “full employment”— at least if you define “full employment” in a way that harken back to the manner in which human rights activists, political progressives, and iconic figures in the fight for Black freedom have employed the term.

What is means is that we’d be well advised to recall that there’s a tradition that defines “full employment” in such a way that it does not countenance the notion that we must be prepared to sacrifice our siblings at the altar of price stability to prevent inflation.

What it means is that there’s a gargantuan difference between the conceptions of “full employment” adhered to by economists like Austan Goolsbee and, on the other hand, by people like Coretta Scott King, Dr. Martin Luther King, Jr., A Phillip Randolph, and Bayard Rustin.