by Helen Ginsburg, Professor of Economics Emerita, Brooklyn College of the City of New York and Executive Committee, National Jobs for All Coalition
Full employment is an elusive term that reflects divergent concepts, values and power relations (Ginsburg, 1991; Gross, 1991; Nixon, 1973). Though concepts overlap, two main strands are discernible. One emphasizes enhanced human welfare. It views employment at a living wage as a human right, with full employment a key to meeting other basic needs (Harvey, 1989). Sir William Beveridge’s influential Full Employment in a Free Society. (Beveridge, 1944) is in this tradition. Beveridge, a British economist, was concerned with the jobless as human beings, and defined full employment as more vacant jobs at good wages “than unemployed men [sic]“. In his analysis, full employment results in larger national output, the economic foundation of a comprehensive welfare state. Other notable examples of this definition include President Franklin D. Roosevelt’s 1944 proposed Economic Bill of Rights, with the right of all to a useful job at an adequate wage; Article 55 of the United Nations (UN) Charter; the 1948 General Assembly Declaration of Human Rights; and the US Catholic Bishops’ Pastoral Letter on the US Economy, Economic Justice for All (NCCB, 1986),which states: “Full employment is the foundation of a just society.”
Another approach views full employment as an unemployment rate–the minimum believed to be attainable. But what rate? Controversies often reveal as much about goals and degree of commitment to full employment as about the lowest achievable rate. What is called “full” employment may simply be a politically tolerable rate of unemployment. Perversely, as the main target of national policies has shifted from people to prices, economists have used the term to indicate the minimum rate they regard, rightly or wrongly, as consistent with stable prices. This is called the “natural rate of unemployment” or “non-accelerating inflation rate of unemployment” (NAIRU)–a jobless rate below which they believe inflation accelerates. Though advocating policies to keep unemployment from dropping below that level, they use “full employment”, “natural rate of unemployment” and “NAIRU” interchangeably. Two past presidents of the American Economic Association (AEA) have criticized this concept. Robert Eisner (1995) calls the NAIRU one of the most powerful influences on economic policy of this century, but his research finds no empirical evidence for its existence. In his presidential address to the AEA, the late William Vickrey (1993), 1996 Nobel Laureate, tagged the “natural rate of unemployment …the most vicious euphemism ever coined”.
Yet, defining full employment as an unemployment rate inevitably raises the issue, “whose full employment?” The official rate masks extensive hidden unemployment, particularly involuntary part-time work and discouragement, which, like official unemployment, are disproportionately concentrated among disadvantaged groups (Collins et al., 1994: Ch. 1; Sorrentino, 1995). Takahashi shows that Japan’s hidden unemployment is more prevalent among women. Correcting for omissions (Bregger and Haugen, 1995) can alleviate this problem but still conceals substantial group and regional differences. Nor do such measures tell us about wages. Defining full employment as envisioned by Beveridge and others links the rights to employment and decent wages. However, Beveridge’s concept was based mainly on the male worker, and has since been updated (Collins et al., 1994).
A humanistic concept means that pay is adequate, the workplace is democratic and disadvantaged groups have equal opportunities. It also assumes a peacetime economy and one that respects the environment. It must include all who want part- or full-time work, whether officially unemployed or outside the labor force. Such a concept–because it includes many women who would otherwise provide full-time care to their families–implies compatibility between family and workplace. It calls for services, such as childÂcare, flexible hours, job redesign and accessible transportation for the disabled–all of which enable people to make meaningful choices about work.
Is this too ambitious? Not if full employment is viewed as a goal that is achievable, though not at once or without great effort. Full employment should be an expanding concept with progressively higher standards (Nixon, 1973). Yet presently there is a landslide in the opposite direction.
*Reprinted from Special Issue on: The Challenge of Full Employment in the Global Economy, Helen Lachs Ginsburg, June Zaccone, Gertrude Schaffner Goldberg, Sheila D. Collins, and Sumner M. Rosen. Editorial Introduction, Economic and Industrial Democracy 1997 18: 5
Beveridge, W.H. (1944) Full Employment in a Free Society. London: Allen and Unwin.
Collins, S., H.L. Ginsburg and G.S. Goldberg (1994) Jobs for All: A Plan for the Revitalization of America. New York: Apex Press.
Eisner, R. (1995) ‘Our NAIRU Limit: The Governing Myth of Economic Policy’, The American Prospect Spring: 58–63.
Ginsburg, Helen (1991) ‘Changing Concepts Of Full Employment: Divergent Concepts, Divergent Goals’, International Journal of Sociology and Social Policy, Vol. 11 Iss: 1/2/3, pp.18 – 28;
Gross, Bertram (1991) ‘From Fool Employment To Global Human Rights’, International Journal of Sociology and Social Policy, Vol. 11 Iss: 1/2/3, pp.118-158;
Harvey, P. (1989) Securing the Right to Employment: Social Welfare Policy and the Unemployed in the United States. Princeton, NJ: Princeton University Press.
NCCB (National Conference of Catholic Bishops) (1986) Economic Justice for All: Pastoral Letter on Catholic Social Teaching and the US Economy. Washington, DC:NCCB
Nixon, R.A. (1973) ‘The Historical Development of the Conception and ImpleÂmentation of Full Employment as Economic Policy’, pp. 9-27 in A. Gartner, R.A. Nixon and F. Riessman (eds) Public Service Employment: An Analysis of its History, Problems and Prospects. New York: Praeger.
Sorrentino, C. (1995) “International Unemployment Indicators, 1983-1993,” Monthly Labor Review 118(8): 31-50.
Vickrey, W. (1993) ‘Today’s Task for Economists’, American Economic Review 83
“[James] Tobin’s experience of the depression as a teenager in the 1930s gave him a lifelong loathing of unemployment. ‘As a young professor I did a paper where I analyzed the optimal unemployment rate,’ said Joseph Stiglitz, a professor at Columbia University in New York, who knew Tobin at Yale. ‘Tobin went livid over the idea. To him the optimal unemployment rate was zero.'” [ “So long Milton Friedman, Hello James Tobin,” Bloomberg News, Feb 27, 2009]