Why Full Employment Now?

I am going to have a bunch more points to make about full employment policy in the coming days and weeks. For right now, I want to build on Steve’s excellent post from earlier to link to this Harold Meyerson piece on both the history of full employment ideas and why it has returned now. The history is very useful and builds on Steve’s tweet thread going after Chait. But I think it’s worth thinking about the why now question a bit more.

Yet today—with official unemployment at just 4.1 percent—it has suddenly been remembered and resurrected. How has that happened?

Yet again, a specific set of dysfunctions of the broader economy has raised full employment from the museum of dead causes. The rise of precarious and poorly paid work, chiefly in but not confined to the service sector; the wage stagnation affecting most of the workforce (which Jared Bernstein documented in a piece for the Prospect earlier this week; the declining level of labor force participation in those parts of the country where work, particularly remunerative work, has largely disappeared; the chronic economic insecurity of millennials, and the political left turn they’ve executed in response; the opening to more radical economic reforms unleashed by Bernie Sanders’ 2016 presidential campaign—all these have led to a new economic radicalism bleeding its way into the Democratic mainstream. The party now embraces the $15 minimum wage; the cause of single-payer is taken up by a surprising number of elected officials; and Wisconsin Senator Tammy Baldwin—up for re-election in a state where working class whites forsook their Democratic allegiances to vote for Donald Trump in 2016—has authored a bill that requires corporations to have their workers elect one-third of their corporation’s board of directors—a feature, somewhat modified, of German social democracy, and one reason why Germany’s workers are, on the whole, doing better than ours.

In this kind of economic climate, it should come as no surprise that full employment is coming back. In the Winter 2018 issue of the Prospect, Mark Paul, William Darity Jr., and Darrick Hamilton made the case for the policy and laid out some specifics of what such a program could look like. A number of economists affiliated with the Levy Economics Institute of Bard College turned out a detailed proposal this month, which I gather helped inform Senator Sanders’ legislation.

As should be clear from this mini-history, the political path to full employment is a daunting obstacle course. But the growing public awareness that actual existing American capitalism isn’t working all that well is propelling us down that path again. And rightly so.

The reality is that the economy is not working well for many millions of people despite low unemployment numbers. Whenever the next recession is, and it’s likely to be relatively soon based on historical norms, it’s going to be brutal. The recovery for recessions since World War II has taken longer and longer, largely because productivity gains and wealth are taken by an increasingly few people. So today you can be out of a recession for several years, have quite low unemployment, and dissatisfaction with the economy is immense. Life is simply not getting better for a lot of people and while that has opened the doors for Trump’s racism to hit home with whites in a way we haven’t seen in a long time, alternatively albeit belatedly, it’s also created space for the mainstreaming of ideas on the left that were seen as political impossibilities mere months ago, in some cases. A job guarantee is one of those ideas and I see a lot of these proposals as preparing the ideological field for the response to the next recession, where I would guess Democrats are going to be much more demanding of corporations than the Obama bailout of the auto companies was.