FULL EMPLOYMENT AND SOCIAL WELFARE POLICY

With the ups and downs of the economy, unemployment comes and goes as a public policy issue. As of November 1990, the official US unemployment rate stood at 5.9 percent, above the 16 year low of 5.0 percent that had been reached earlier in the year. Around the 5 percent level of unemployment, a majority of economists say that the labour market is near the “natural rate of unemployment”, the rate at which labour shortages lead to wage increases, pushing inflation higher. At this level, few people talk about unemployment as an economic or a political problem. Unemployment has not been a major issue in recent US election campaigns. Indeed, there has been far more public discussion about the possibility of labour shortages in the United States during the coming years. Although a US recession has probably arrived, the Federal Reserve Board and most economists are more worried about inflation than about unemployment. Assuredly, however, as the recession deepens, unemployment will rise and will again be in the spotlight. Politicans will give speeches. Makeshift legislation will be enacted. And then, just as assuredly, with the next economic recovery, unemployment will fade once again from the political agenda.