The Promise of Full Employment
The benefits of full employment are well understood, and underscored by our recent experience (including both the boom of the late 1990s, and our more recent recession). Tight labor markets bid up wages—especially for those at the lower end of the scale—and help to arrest wage and income inequality. With improvement in workers’ bargaining power come improvements in job quality, including more expansive or generous benefits. And tight labor markets open more employment opportunities, encouraging participation in the labor force and movement from part-time to full-time employment for those who want it.
The gains to individual workers and their families, in turn, spread across the economy. Employers facing higher labor costs are encouraged to ensure that the labor they pay for is productive, and are more likely to invest in training and other efficiencies. Healthy rates of labor force participation and wage growth reduce demands on public programs while—via income, sales, and payroll taxes—filling public coffers. And of all of the deleterious effects of chronic unemployment are reversed: workers are healthier, better educated, and more mobile. Full employment, in short, is the best social policy you can have.
Strategies to achieve full employment include shifts in the priorities of fiscal and monetary policy, a “jobs-first” approach to trade and social policies, and labor market reforms such as work sharing. And the pursuit of full employment (through public programs or public subsidies) can be harnessed to other economic and political objectives, such as infrastructure improvement or energy efficiency.
So why is full employment so elusive? The first obstacle is the conviction—persisting despite a generation of experience to the contrary—that tight labor markets will bring inflation. More broadly, and as the economist Michael Kalecki first underscored in the aftermath of World War II, full employment threatens the economic and political interests of business and financial interests—who resent government regulation of labor markets, public spending, and the bargaining power that flows from tighter labor markets. “Under a regime of permanent full employment,” as Kalecki observed in 1946, “the 'sack' would cease to play its role as a 'disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow.”
See Robert Pollin, Back to Full Employment (2013), and the summary in Boston Review (2011); L. Randall Wray, The Social and Economic Importance of Full Employment (Levy Institute, 2009); Jared Bernstein, Where Have All the Jobs Gone?, New York Times (2013); Jared Bernstein and Dean Baker, The Benefits of Full Employment (EPI, 2003); and their follow-up Getting Back to Full Employment (CEPR, 2013)
The gains to individual workers and their families, in turn, spread across the economy. Employers facing higher labor costs are encouraged to ensure that the labor they pay for is productive, and are more likely to invest in training and other efficiencies. Healthy rates of labor force participation and wage growth reduce demands on public programs while—via income, sales, and payroll taxes—filling public coffers. And of all of the deleterious effects of chronic unemployment are reversed: workers are healthier, better educated, and more mobile. Full employment, in short, is the best social policy you can have.
Strategies to achieve full employment include shifts in the priorities of fiscal and monetary policy, a “jobs-first” approach to trade and social policies, and labor market reforms such as work sharing. And the pursuit of full employment (through public programs or public subsidies) can be harnessed to other economic and political objectives, such as infrastructure improvement or energy efficiency.
So why is full employment so elusive? The first obstacle is the conviction—persisting despite a generation of experience to the contrary—that tight labor markets will bring inflation. More broadly, and as the economist Michael Kalecki first underscored in the aftermath of World War II, full employment threatens the economic and political interests of business and financial interests—who resent government regulation of labor markets, public spending, and the bargaining power that flows from tighter labor markets. “Under a regime of permanent full employment,” as Kalecki observed in 1946, “the 'sack' would cease to play its role as a 'disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow.”
See Robert Pollin, Back to Full Employment (2013), and the summary in Boston Review (2011); L. Randall Wray, The Social and Economic Importance of Full Employment (Levy Institute, 2009); Jared Bernstein, Where Have All the Jobs Gone?, New York Times (2013); Jared Bernstein and Dean Baker, The Benefits of Full Employment (EPI, 2003); and their follow-up Getting Back to Full Employment (CEPR, 2013)
Discussion of "The Promise of Full Employment"
Add your voice to this discussion.
Checking your signed in status ...