The US Needs To Focus On Jobs
Start writing a post

The Federal Reserve believes that the United States is currently at, or above full employment. What is full employment? The idea is that employment is as low as possible, without causing inflation, which could be a concern if, say, everyone had a job, and employers raised wages to compete with each other so fast that the rest of the economy couldn't keep up with the rising wages. So the Fed believes that the current rate of unemployment is below the rate of natural unemployment, which is more or less the rate at which a healthy economy allows people to quit their jobs to find better ones, and more efficiently allocate workers into better positions.

So a quick look at a few charts and the economy is looking very good.

In 2007 there were 121 million people employed, while in 2017 there were just under 126 million people employed.

Also in 2007, the unemployment rate was 4.6%, in 2017 it was 4.4%.

Looking at all this it would appear that the economy has more than recovered from the Great Recession, but there are some people who are more skeptical. Although both in and outside of the Fed, economists think the Fed is making the right call, "others think the Fed can afford to be patient and that the official rate of unemployment can fall even further before inflation concerns need to be addressed."

The main reason economists think it's too early to call whether or not we are at full employment? Wages. Namely, they aren't rising fast enough, in fact, they are hardly rising at all. Remember how I said early that the worry with full employment is that rising wages would cause rising inflation? Well, if wages aren't rising then there is no reason to believe that inflation will rise, nor is there any reason to think that employers are trying to compete with each other over job-seekers. Also worth noting, "job gains have failed to slow much, and you would expect them to in an economy at full employment."

It may be that wage growth has slowed because "many firms were unable to reduce wages during the recession, and they must now work off a stockpile of pent-up wage cuts." But if that is the case, is de-incentivizing business from borrowing money by raising interest rates a good idea? Wouldn't a smarter option to be to wait for business to catch their breath from the recession? And what would happen if the Fed overdid it a little bit? Jared Bernstein, a former chief economist to Vice President Joe Biden, and a senior fellow at the Center on Budget and Policy Priorities, said, while referencing a Paul Krugman article, that 'we should act as if there's more slack than he thinks there is, because the "the costs of [Fed] tightening when the economy still has room to grow are much bigger than those of waiting and discovering that we've overshot a bit.'"

In conclusion, in a time where it is both true that our economy is doing well, and there is still room for improvement, the Fed pumping the breaks are only going to draw out, or worse yet stop an already slow recovery.

Report this Content
This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.

Hittin' the Road Playlist

With the end of August approaching more quickly than many of us would like, the preparation for school is happening in more ways than just one.


The car is all packed. The money you saved (and didn't spend online) from your summer internship is secured quietly in your bank account. The immediate reunion with your long-distance college friends is set. The real question on everyone's minds is: do you have the perfect melody to jam to as you journey back to school? 

Keep Reading... Show less

20 Quotes That Will Make You Smile Today

Everyone could use more self-care and without the judgement...

20 Quotes That Will Make You Smile Today

Welcome to a new day and a new opportunity to be our best selves. Here's a list of 20 quotes about self-care, self-love, positivity, and finding inspiration. Carry these quotes with you throughout your day for positive upliftment!

Keep Reading... Show less

10 Small Reasons To Smile​

There's always a reason to be happy.

10 Small Reasons To Smile​

It doesn't cost a thing - so smile.

Keep Reading... Show less
11 Songs That Will Hit You In The Feels, No Doubt About It

One of my favorite things to do when it comes to music is making different playlists on Spotify. I find it so fun to go back to old songs, find new ones, and categorize them into my different playlists. We all have that one playlist that we resort to when we are really feeling some type of way — also known as a "feels" playlist. If you have one of these playlists or feel ~inspired~ to make one, here are 11 songs that are a must to add.

Keep Reading... Show less

To My Fellow Girls With Resting B**** Face

A letter to my friends with RBF about understanding your own face and helping others deal with it.

Jupe du Jour

To the girl with resting b**** face:

Keep Reading... Show less

Subscribe to Our Newsletter

Facebook Comments