Back To Full Employment

In the Boston Review, a forum on full employment, starting with a lead article by Robert Pollin and responses by Reihan Salam, James K. Galbraith, Ruy Teixeira, Eileen Appelbaum, Andrew P. Morriss & Roger E. Meiners, Lane Kenworthy, Jayati Ghosh, and Michael J. Piore. Pollin:

Employment conditions in the United States today, in the aftermath of the 2008–09 Wall Street collapse and worldwide Great Recession, remain disastrous—worse than at any time since the Depression of the 1930s.

Since Barack Obama entered office in January 2009, the official unemployment rate has averaged more than 9.5 percent, representing some fifteen million people in a labor force of about 154 million. By a broader definition, including people employed for fewer hours than they would like and those discouraged from looking for work, the unemployment rate has been far higher—16.5 percent, on average. Still worse, if we count people who have dropped out of the labor force, unemployment would rise to nearly 20 percent, or 30 million people, roughly twice the combined populations of New York, Los Angeles, and Chicago.

The first major act of the Obama administration was the economic stimulus—the American Recovery and Reinvestment Act—which focused on fighting the recession and mass unemployment. This $787 billion program of tax cuts and government spending measures aimed to brace the economy’s rickety floor and thereby preserve existing jobs as well as generate new ones in both the public and private sectors. The stimulus program did succeed in preventing a full-scale 1930s-style depression. A Wall Street Journal survey found that 75 percent of economists agreed that the stimulus succeeded in reducing unemployment. A detailed study by Alan Blinder, a Princeton economist and former Federal Reserve Vice Chair, and Mark Zandi, Chief Economist at Moody’s Analytics and an advisor to John McCain’s Presidential campaign, found that unemployment would likely have risen to nearly 17 percent in the absence of the stimulus.

But the stimulus has clearly proven inadequate for fully reversing the effects of the Wall Street collapse.