“Full employment” is a macroeconomic term describing an economy where everyone who wants a job can find one.
Since an unemployment rate of zero is almost impossible—because there are always people in job transition—economists have differed over what unemployment rate is, for all practical purposes, full employment. But somewhere in the 4 percent to 5 percent range is usually thought to be close to full employment.
Except the U.S. economy hit a 5 percent unemployment rate in October and November, and yet it feels like we’re a long way from full employment—since millions of Americans are still struggling to find a job or have just given up.
Patricia Cohen of the New York Times recently wrote about the difficulty women over the age of 50 are having finding a job. For example, 28 percent of unemployed women between the ages of 20 and 24 are considered long-term unemployed—that is, looking for work for 27 weeks or more. However, 48.8 percent of unemployed women between the ages of 55 and 64 are long-term unemployed.
And it’s not just seniors and near seniors, Leah McGrath Goodman writes for Newsweek, “The millennial generation is still lagging in the workplace, just as it did last year . It makes up about 40 percent of the unemployed in the U.S., says Anthony Carnevale, a director and research professor for Georgetown University’s Center on Education and the Workforce.”
So how can the unemployment numbers look so good—a point President Obama frequently highlights—and yet employment prospects be so bad?
The answer is a statistical quirk. The government counts as unemployed only those who do not have a job and have been looking for work in the last four weeks.
Those who have given up the search because they couldn’t find a job—and there’s a whole lot of them—are no longer considered unemployed, even though they are about as unemployed as you can get.
The labor force participation rate—the percentage of Americans actually working—has dropped on Obama’s tenure to record lows, from 65.7 percent in January 2009 to 62.5 percent last November.
Thus we have “full employment”, or close to it, but with millions of Americans willing but unable to find a job. It’s just one more anomaly of the Obama economy.