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Will America Ever See Full Employment?

At CNS News yesterday, Terry Jeffrey reports, "America will never see full employment under (President) Obama," and sources the story to projections by the Congressional Budget Office.

According to Jeffrey, "(t)hat would make Obama the only American president during the post-World War II era who never presided over a year in which the U.S. economy offered full employment to the American people." He then goes on, and writes, in part:

"The CBO defines “full employment” to be when the national unemployment rate is at or below what it calls the “natural unemployment rate.”

"The natural unemployment rate, according to CBO, is the “rate of unemployment arising from all sources except fluctuations in aggregate demand. Those sources include frictional unemployment, which is associated with normal turnover of jobs, and structural unemployment, which includes unemployment caused by mismatches between the skills of available workers and the skills necessary to fill vacant positions and unemployment caused when wages exceed their market-clearing levels because of institutional factors, such as legal minimum wages, the presence of unions, social conventions, or wage-setting practices by employers that are intended to increase workers’ morale and effort.”

"In a blog entry published last week, CBO Director Doug Elmendorf said “we think it will take four more years to get back close to full employment.

"In fact, baseline data CBO released last month indicate that the “natural unemployment rate” will be 5.5 percent through the rest of Obama’s presidency and that actual unemployment will never drop below 6.0 percent in any quarter between now and the end of 2016." (emphases added)

Jeffrey's article has links to his many sources for this important story. By the way, a Google search produced virtually no mainstream news outlets that covered this significant news story. Kudos to CNS News' Terry Jeffrey for the story.

Wikipedia has a fairly well-developed entry about full employment. BusinessDictionary.com has a far simpler definition. Although full employment has not been discussed for many years, readers may find a story by Stephen Oliner, a resident scholar at the American Enterprise Institute, of interest. It was posted last July at Real Clear Politics.

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