Re: What is Full Employment?

[Bill Mitchell <ecwfm@xxxxxxxxxxxxxxxxxxxxxxx>]

> Thus full employment means that no one who is ready and willing to work
> for an appropriate wage is without a job (essentially Paul's definition
> I think, and something like Vickrey's "chock-full employment"). This
> also means zero involuntary part-time employment.

>to job search). Thus we are concerned with true full employment of
> labor, where every person ready and willing to work full-time has
> full-time employment, and those ready and willing to work part-time have
> as many hours of part-time employment as they desire.
>
> There remains the question of whom and how many from among the "out of
> the labor force" could or should be working.

This is a vexed topic and points to how inexact economics is as a discipline.
I understand all of the above (including Paul's definition) and largely
accept it
in concept. But in terms of applicability it becomes impossible.

Who assesses what an appropriate wage is?
Who assesses what is a person's skill/talent? the person? the potential
employer?
An employment service?

In the past to avoid "work tests" attached to receiving unemployment
benefits in Australia
recipients (living in desirable coastal surfing towns) used to register as
"lion tamers". The system
is now changed dramatically but you see the problem. As an aside, an
official in the now defunct
govt employment service told me that once such lion tamer was actually
"trapped" because
on the day he registered a circus visiting the small surf town actually was
in desperate need
for a "lion tamer" after the real lion tamer ran away with the teenage
trapeze beauty.....

The point is clear. There is no way of determining what is an appropriate
job. This becomes
even more accentuated when you think of the "old fashioned" concept of
structural
unemployment and juxtapose against the view that most skills are learned
"on-the-job".
So calling someone "unskilled" in this sense is rather vacuous. What it
means is that
the employer is unwilling to offer the person the requisite training. This
amounts to another
source of discrimination.

Further, there is a growing literature on "informal skill development"
whereby many unemployed
who are considered "unskilled" by the capitalists are in fact highly
skilled. they have no paper
to verify it, haven't been to university, might be functionally illiterate,
but can "fix a motor"
like no-one else. etc... In that case, it is very difficult to say what an
appropriate job is.

So, while in concept "chock full employment" is desirable and a goal we
should never stop
working towards ... in practice, I prefer to aim for a "looser" full
employment.

I define by outlining two components:
a) democratically elected governments (which excludes the current USA
Administration!) determine
a public sector level of employment to fulfill its political mandate and
pays market wages to
its workforce (teachers, doctors, etc..... ). This workforce may be large,
small, or in-between
and can actively target so-called activities which the private sector might
also decide to participate
in. I don't accept that "zero substitution" is a required goal of a public
sector "market wage" job.
It depends on what "the people" want!

b) private sector employment at legal (award in australia) wages determined
by wage tribunals  to be
appropriate for the relative living standards of the community with an eye
to sharing productivity
growth on a national basis.

c) Crucially, if A + B < the willing labour force ... then the government
must be prepared to offer
anyone "unemployed" a productive job at a wage to be determined. This wage
could be above the
private (legal) minimum, which would mean that the govt wanted the minimum
to increase.
This is the Job Guarantee component (ELR in CFEPS-speak). It doesn't
discriminate on "skills".
It just ensures that a person has a job to go to if they are unable to find
one elsewhere in (a) or (b).
Of-course, it is desirable that there are plenty of (a) and, perhaps, (b).
but the reality is that
(c) has always been required explicitly (or implicitly, as in Australia's
past) to have low measured
unemployment.
The JG could also work to eliminate underemployment because it would
pressure capitalists
to improve their own job offers/conditions or fear losing their workforces
(typically low pay, fractional)
to the JG pool.
The remaining issue is what is the willing labour force. Well if (a) + (b)
does not deliver low measured
unemployment (and zero hidden unemployment) then a desire for income will
be the test. That means
to run the JG, I advocate that no unemployment benefit be offered (although
that is a preference and is
not an essential component of the JG).

CofFEE has a lot of literature on this - http://e1.newcastle.edu.au/coffee

As an aside, the JG requires a flexible exchange rate. A fixed exchange
rate will not be conducive.

best wishes
bill


The government might also






William F. Mitchell
Professor of Economics
Director, Centre of Full Employment and Equity
University of Newcastle, NSW, Australia
E-mail: ecwfm@xxxxxxxxxxxxxxxxxxxxxxx
Phone: +61-2-4921 5065
Fax:   +61-2-4921 6919
Mobile: 0419 422 410

http://e1.newcastle.edu.au/economics/bill/billeco.html
http://www.billmitchell.org