How a Strong Job Market Has Proved the Experts Wrong

New York Times ^ | Neil Irwin

[Alberta's Child]

So called “full employment” is a totally arbitrary number. Back in the day and all the way up to this time (apparently) the labor force was considered to be at full employment when the jobless rate was around 6% or a bit less.

That's exactly right. The concept of "full employment" is commonly misunderstood. You can have full employment even if 40% of the working-age population is not working ... or when 99% of them are.

The term "full employment" is used to describe a scenario where the number of available workers in various industries across the board is so small that we see upward wage pressure that exceeds inflationary trends by a wide margin.

If our economy has 40 medical doctors and 10,000 ditch diggers but we need 60 MDs and only 2,000 ditch diggers, our unemployment rate might be very high but we might still have "full employment" because ditch diggers can't become doctors overnight and the demand for the MDs will drive up their wages considerably.

[SteveH]

unexpected... drink! :)

[Oatka]

People often say that this expansion, now in its 11th year,
No, People often say that this expansion, now in its 11th fourth year, - there, fixed it.

Still pushing the lie that the economy was getting better under obama.