New issue brief argues the US can reach true full employment and reduce racial and gender inequalities in the labor market
There has never been a better—or more urgent—time to invest in our future. With the right policy choices, and absent further upheaval from COVID variants, the coming years could be remembered as the rebirth of a dynamic, more egalitarian US economy—an extended period of wage gains and capacity-boosting investment, with new spending pushing against the productive potential of the economy. To that end, if policymakers choose to manage this economic boom rather than fight it, we could see true full employment and the reduced racial and gender inequalities that come with it—but we cannot do this with our current, flawed measures of employment.
A new Roosevelt issue brief, “Reimagining Full Employment: 28 Million More Jobs and a More Equal Economy,” explains how the United States’s current estimates of full employment undermine economic growth and actually harm the very workers primed to benefit the most from a tight labor market. Instead, Mason, Konczal, and Melodia model a world where all people are afforded the same labor market privileges as white men with college degrees (unsurprisingly, the demographic group with the highest rates of employment historically after adjusting for age) and find that, after accounting for educational differences and childcare responsibilities, 28 million more people could be drawn into the labor force. In other words, the US could reach an employment-population ratio of 68 percent by 2031, about 10 points higher than the Congressional Budget Office’s estimate of maximum employment and the current employment-population ratio as of June 2021.
The results of their findings also have two immediate implications for the US economy:
- Sufficient demand is a necessary condition for eliminating the labor market disadvantages of BIPOC, women, and people without college degrees; and
- The existence of these racial, education, and gender employment gaps suggests there is much more labor market slack than conventional, inaccurate estimates imply.
These findings mean that if policymakers calibrate our economic policies to accommodate 28 million more jobs, the US can reach true full employment and reduce racial and gender inequalities in the labor market.
Insight from the authors:
“It’s time for a much more ambitious definition of full employment. Even before the pandemic, the US economy was operating far short of potential. With sustained strong demand, we could see far greater job growth than most people are predicting today,” said J.W. Mason, Roosevelt Institute Fellow, .
“A great deal of work is needed to update our ideas about economic policy for a new world as we move from stagnation to sustained growth. This is a moment of great opportunity for the economy, but we need to set more ambitious goals to take advantage of it,” said Mike Konczal, Director, Macroeconomic Analysis and Progressive Thought.
“Moving toward true full employment will have tremendous benefits—not just more growth, but a more equal economy. With strong public investment, we can greatly reduce the employment gaps between Black and white workers, women and men, and those with more and less formal education,” said Lauren Melodia, Deputy Director, Macroeconomic Analysis.
About the Roosevelt Institute
The Roosevelt Institute is a think tank, a student network, and the nonprofit partner to the Franklin D. Roosevelt Presidential Library and Museum that, together, are learning from the past and working to redefine the future of the American economy. Focusing on corporate and public power, labor and wages, and the economics of race and gender inequality, the Roosevelt Institute unifies experts, invests in young leaders, and advances progressive policies that bring the legacy of Franklin and Eleanor into the 21st century.