Economists look at US employment and ask how full is full?

What is full employment in the United States today? President Reagan and his Democratic challenger, Walter Mondale are making full employment - the creation of jobs for all who want them - a critical issue in the election this year. This is nothing new. Democrats and Republicans have fought over full employment concepts since the 1930s.

However, attitudes are changing about how much joblessness can be tolerated in a ''full employment'' economy, and there is growing concern over what kinds of jobs can be created.

September's unemployment rate, released by the Bureau of Labor Statistics last Friday, showed that 7.4 percent of the civilian labor force - or some 8.5 million people - were without jobs. That rate falls to 7.3 percent if those in the armed forces are included. The civilian rate was high by historical standards, but represented a slight decline from August and in line with unemployment levels since May.

The Reagan administration hailed the ''stabilized'' jobless rate as an indication that the economy is continuing to expand and that prospects are ''excellent for the creation of more jobs.''

The AFL-CIO and Democrats took a different position. The federation said that ''for five months the unemployment figure has been stalled at a level President Reagan said was intolerable in 1980. He was right then, and to call it good news now is wrong.''

In September, 105.2 million Americans were working - well over 90 percent of the civilian labor force, the highest percentage in any country in the West.

The immense capacity of the US economy to produce jobs for so many in its population was the envy of economists and other conferees at a summit meeting on jobs in London in June. In the last decade while Western Europe lost 2 million jobs, the US created about 20 million. While 99 million Americans were employed December 1982, when the economic recovery began, more than 105 million are working now.

Despite the 270,000 job gain, total employment remained considerably below a peak 110.2 million in the early 1980s. Organized labor complains that jobs are not being created fast enough.

In addition to the number of jobs created in the economy, the growth of the labor force is important to the question of full employment. The more who are employed, the larger the number who are changing jobs or looking for new work, or are otherwise jobless. Because of these changing conditions, economists are sharply divided over what level of employment constitutes ''full'' employment in a growing and changing economy: 5 percent, 6 percent, 7 percent, or higher?

Realistically, full employment does not mean that there is a zero unemployment rate. One definition of full employment is the rate below which further reductions in unemployment would fuel inflation. For a given number of available jobs, as the number of unemployed shrinks, workers can bid up wages. This puts pressure on employers to raise prices to cover the higher labor costs.

Moreover, in a full-employment economy there are always those who are changing jobs, who are idle because of illness or by choice, or are not working for other reasons. In the 1950s, economists usually set 3.5 percent to 4 percent as a level of full employment. Unions, the sharpest critics of unemployment, live comfortably with such a standard.

Now most economists agree that such figures are no longer valid. Most talk of a 6- to 7-percent unemployment rate as about the best that can be achieved in a civilian labor force of 105 million or more and at a time when changing technology is reducing the demand for workers in manufacturing and other industries.

The Presidents' Council of Economic Advisers considered in 1983 dropping the concept of full employment. One member, William Poole, said: ''Identifying a number that you can call full employment is awkward and puts you into a fuzzy never-never land.''

Given current economic circumstances, economist Marvin Kosters of the American Enterprise Institute talks about 7 percent unemployment as a level of full employment. Harvard's Quinn Mills has stuck to a 3.5- to 4-percent level as the minimum tolerable.

In politics, emphasis is now more on job creation in general terms than on cutting unemployment to soime specific statistical level. The AFL-CIO said on Oct 9 that 125,000 more manufacturing jobs were lost in September to add to the hundreds of thousands lost in that sector of the economy since 1981. Labor leaders also say that the 3.6-percent growth rate under the adminstration's economic policies will not create a sufficient number of jobs to reduce unemployment to what they consider more tolerable levels.

Jobs are being created and should continue to be, but perhaps more slowly in an economy that appears likely to expand at a slower rate. One problem is the quality of jobs being created. In September, and gererally this year, the added jobs have been in the service industries, retailing, and high technology -- with lower wage rates than jobs being lost in manufacturing.

For example, a Mahwah, N.J., Ford plant closed four years ago, idling about 4 ,000 auto workers. The site has just been sold to developer who plans to build a hotel and office park there. The complex is expected to generate 6,000 jobs, but at wages and salaries expected to be two-thirds or less of those Ford Workers received.

About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.




Save for later


Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items


Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items


Failed to save

You have already saved this item.

View Saved Items