Although the term “full employment” may be a bit of a misnomer— it doesn’t signify that everyone is employed— it is a helpful metric for determining an acceptable level of unemployment.
In other words, since zero percent unemployment is unattainable, the concept of full employment is the one of the better figures we can use to gauge the prosperity of the collective of working age Americans.
Thus, it was good news on Monday when John Williams, President of the San Francisco Federal Reserve, declared the American economy to be “basically at full employment.” Williams would cite America’s two percent annual GDP growth, along with its five percent unemployment rate, half of what it was during the recession, as positive signs for the economy.
As further proof of the relatively fortuitous economy, America has added 200,000 new jobs a month for the past two years, and many who had given up on the job search have begun to re-enter the labor market.
Therefore, Williams strongly believes that the main reason that many Americans are frustrated with the economy is not because of the rate of employment, but rather the growing rate of income inequality.
In typical periods of full employment, wages grow somewhere between three and 3.5 percent a year on average. At present, wages are only growing by 2.5 percent.
Beyond this, many Americans are employed, but only in a part-time capacity— with full-time work being sought. These part-time positions rarely provide benefits or pay well.