Getting Back to Full Employment

November 20th, 2013 at 2:23 pm

Getting Back to Full Employment: A Better Bargain for Working People, the hot new book by Dean Baker and yours truly, is yours to download.  I’ll post a summary up here when and if I come up for air, but please spread the word!  As you can see, we’re not trying to get rich off of this, but each day I’m more convinced that the achievement of full employment labor markets is one of the most important goals of economic policy.

What’s the unemployment rate at full employment?  Good question.  Here’s your answer, over at the NYT Economix blog.

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12 comments in reply to "Getting Back to Full Employment"

  1. Brett says:

    I bet we could do even better than 4% in a full employment situation. If the labor market got too tight, then the US would just import a whole ton of legal (and illegal) labor into the country from Latin America, like last time back in the late 1990s.

  2. Dimitar Uzunov says:


    The book is wonderful! But the PDF format isn’t suitable for reading on mobile devices and e-book readers. A .mobi or .epub file however will very portable across devices with different resolutions so more people will learn how to get their full employment or as Bob Solow calls it – getting people back to work :-).

  3. Kevin Rica says:

    Full employment?

    Can you convince the Dems that we don’t already have a massive labor shortage and don’t actually need 2 million more immigrants a year or California farmers won’t have enough cheap labor and we’ll all starve to death?

  4. Seattle Alex says:

    Thanks! Been waiting for this

  5. Smith says:

    The book has this to say on immigration:

    “Globalization, which leads to the loss of factory jobs, and immigration of less-skilled workers may have played a role, but the larger story has to do with booms, busts, and macroeconomic policy mistakes.”

    Since two of the comments are directed at immigration policy, I’ll comment while it’s still timely. I haven’t read the book yet, but it’s hard to imagine globalization and immigration are not important factors. Not a zero sum game, immigrants help the economy grow, more people, bigger economy. But part of current immigration policy unnecessarily suppresses wages. It does this by creating second class workers, who face deportation (vs. attaining eventual permanent status) if their employers are displeased. That’s not a free labor market. Low wages help create debt-fueled booms and busts. The current un-reformed bill stalled in Congress would greatly expand this corporate welfare, especially for big agri and high tech. During de-industrialization, globalization was a way to de-unionize.

    You can’t just look at the number of jobs outsourced or insourced. The impact on wages is more significant. Previous studies ignore downward nominal wage rigidities.

    I don’t have time right now to back this up with data and links. First, I’ll have to read the book.

    • Smith says:

      I only got to read Chapter 5 just now (skipping ahead). How is that not Globalization? Great political angle on who benefits from overvalued dollar. Don’t think I’ve run across that previously.

    • Kevin Rica says:

      “immigrants help the economy grow, more people, bigger economy.”

      Really? Canada and India have the same size economy. Which do you think is a richer country?

      If simply having more unskilled labor helped the economy grow, then why do think we have unemployment? Don’t we already have more people than jobs?

      Don’t believe all this stuff that the California congressional delegation tells you. Those people invented the “Twinky Defense.” They will claim to believe anything, no matter how illogical, and they want to make sure that their landowners have enough cheap labor.

      If all the illegal immigrants left, there would be plenty of people left to take every lousy job they vacated. But the wages would be higher and the jobs wouldn’t be so lousy any more.

      • smith says:
        India has a slightly larger economy though admittedly Canada is obviously a richer country (more wealth per person). But even unskilled labor makes the economy grow, hence India larger.
        We have elevated unemployment because of a housing bubble involving a good deal of fraud not because of immigration

        My argument was a certain type of corporate welfare that masquerades as immigration, suppresses wages. The status of illegal immigrants also suppresses wages, for them, immediate amnesty might actually be the best solution.

        In the past, the labor movement (and thus the wage rate) was strengthened by immigrants who led the drive to organize, and bargain (or strike) for better pay and benefits.

        The current immigration law prevents that with employee sponsored entry and deportation threat, and the new proposed law greatly expands the problem. The employee sponsorship is an order of magnitude higher problem than any contention the number admitted is too large.

        • Kevin Rica says:


          It’s the numbers. Illegal immigrants take jobs that Americans need. Legalizing them doesn’t change that. It just helps illegals get the jobs and displace Americans. It’s good for them, bad for America’s poor. It’s like legalizing crack cocaine. It just turns a dangerous addictive drug into a legal addictive drug. I guess it depends on who you want to help.

          And illegal immigrants are used to break unions — like the meatpackers.

          Even if you do legalize more industries, unions don’t increase the demand for labor, but immigration increase the labor supply and reduces wages.

          I guess it comes down to whether you are willing to sacrifice America’s to benefit the foreign poor and America’s rich. You consider that an acceptable sacrifice. I consider that unacceptable and futile.

          • smith says:

            Immigration increases the supply of labor, which is great in a growing economy where labor is in short supply. In a healthy growing economy where labor reaps the benefits of increased productivity, immigration prevents inflation and stagnation. In European countries where population growth is nil and productivity gains are more evenly distributed, immigrants are thus recognized as a healthy resource to supplement the shortage of labor.

            One fundamental concept about immigration and labor in general is that in the long run, increasing the labor supply will not lower labor demand. Double the supply of labor and the economy doubles, demand for labor doubles, subject of course to adequate natural resources and equivalent skill levels before and after.

            The problem is the initial state of immigration, immigrants are unemployed and willing to work for less. This halts wage growth and creates less per capita demand. There’s also a lag in capital building factories or businesses to employ immigrants and also meet their new demand for goods and services. However, the flip side is new immigrants usually don’t arrive with homes, appliances, cars, furniture, all their clothing needs, etc. So there is counter acting boost to the economy too.

            The biggest problem with immigration is that workers on temporary visas face deportation if they displease the boss. Immigrants previously played a decisive role in the labor movement. So called reform would greatly expand pressure to lower wages, low and high skill, Unions are backing the plan for some long term membership gains they anticipate will eventually result, while selling out the American worker.

          • Kevin Rica says:


            “Double the supply of labor and the economy doubles, demand for labor doubles,”

            So many things that we must disabuse Freshman of in one short sentence..

            If all of this were true, why does Canada have the same size economy as India?

            Why doesn’t Haiti’s population growth make them richer?

            The average standard of living in the US was highest when the number of immigrants, both in absolute numbers and as a proportion of the population were at the century low.

            You can make sweeping assertions, but they just don’t conform to reality.

            But this one:

            “In European countries where population growth is nil and productivity gains are more evenly distributed, immigrants are thus recognized as a healthy resource to supplement the shortage of labor.”

            Really? Are you kidding?

            The immigrants (who supposedly came because their labor was needed) are rioting because they don’t have jobs.

            And the right-wing, anti-immigrant parties are being allowed to exploit the unemployment problem that is only aggravated by immigration.

            Critical thinking is a lost art. Critical thinking is not just criticizing
            Republicans. It means criticizing your own beliefs so that you don’t get caught saying embarrassing things.