[NJFAC] Dean Baker on the importance of low unemployment

Full Employment: One Last Time for the Road

"....There is no better way to give large benefits to tens of millions of people, especially groups facing discrimination in the labor market like Black workers and people with criminal records.....

In the Biden years, many pundits argued that unemployment doesn't matter much because a one percentage point drop in the unemployment rate just means another 1.6 million people have jobs. That doesn't seem like a very big deal in a workforce of 160 million.

But this reasoning is badly confused. Full employment matters not just because it reduces the number of people who are unable to find jobs, but also because it improves the bargaining position of tens of millions of workers. The point is simple, but huge.

In a normal month 5-6 million people lose or leave their job, with the vast majority looking for new ones. That translates into 60-70 million people over the course of the year coming into direct contact with the state of the labor market. For these people it matters enormously if there is a strong labor market near full employment or a sagging labor market where people struggle to find jobs.

In a strong labor market these workers will be able to move to better jobs that pay more and offer better working conditions. It's not an accident that we saw a record level of workplace satisfaction in 2023 after we had record rates of job switches the prior year.

The ability to leave for a better job also leaves workers better positioned to get pay raises at their current job, if they decide not to leave. This is especially true for workers at the lower end of the wage distribution. They have far more bargaining power than in a weak labor market.....

The Black-White wage gap was also reduced during this period. The 13 percent gap in 2023  is the lowest level on record....."

ps In the article, Baker calls it "low" unemployment, a far better description than full employment, at a time when the lows of 3.4 to 4.0% unemployment mean that in December 2024, for example, when the official rate was 4.1%, 6.9 million people were unemployed and another 9.9 million were involuntarily part-time or wanting a job but not looking for a variety of reasons, including discouragement, or lack of childcare or transportation. And these numbers do not indicate the economic distress of the wider circle which includes their families. jz

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June Zaccone
National Jobs for All Network
http://www.njfac.org

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