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Why Some Still Can't Find Jobs As The Economy Nears 'Full Employment'

Economists use the phrase "full employment" to mean the number of people seeking jobs is roughly in balance with the number of openings.
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Economists use the phrase "full employment" to mean the number of people seeking jobs is roughly in balance with the number of openings.

"Full employment" is a phrase economists use to explain how the job market recovers from a recession. We'll be hearing this phrase a lot as the Labor Department releases the latest jobs data on Friday. It's expected to show that employers added even more workers in January.

But the phrase doesn't tell the full story for millions of Americans either still out of work or who are looking for something better than part-time work.

What is full employment and what does it mean?

To economists, it's when the number of people seeking jobs is roughly in balance with the number of openings. It doesn't mean the unemployment rate is zero because that's not realistic. There will always be some unemployment. Companies have to close down obsolete operations, individuals have to quit their jobs to move with a spouse, or they might move to look for something better with higher pay.

If the economists don't mean zero unemployment when they use the phrase "full employment," what do they mean?

Economists say a healthy job market has an unemployment rate somewhere between 4.6 percent and 5 percent. Some people are quitting, some people are getting hired — there's churn but no despair. In December, the national rate was 5 percent and now many predictions have the rate gliding down to 4.6 percent by July. So bingo, we're basically there at full employment. If all goes as expected in 2016, people who want jobs will be able to find them, and employers who need workers will be able to attract them.

Is it really fair to use the term "full employment" when that doesn't seem to match the reality that a lot of people are experiencing?

Those words can hit hard and they can hurt because it sounds like you must be doing something wrong. But really, unemployment is very regional. In West Virginia, there are counties today with unemployment rates of 12 percent or even 13 percent. But in California's Silicon Valley, the rate is virtually zero, with companies battling each other for workers. So geography matters!

And there are big differences based on age. For black teenagers nationwide, the unemployment rate is 21 percent. For women of any color, if you're 50, studies show you have a tough time getting back to the workforce. You become long-term unemployed. Besides age and location, more than anything, education determines your unemployment rate. For college graduates, it's 2.3 percent unemployment; for high school dropouts, 7 percent.

Is "full employment" something that a lot of Americans are still going to experience as something very unsatisfying?

If you're a 30-year-old with a college degree and a U-Haul, you're all set, you can find jobs. If you want to go to night school and you want to move, you can be part of that full employment economy. But the reality for a lot of people is that it is very hard. About 7.9 million people remain unemployed because they may not fit that demographic description. Like women in their 50s who may actually be at the center of a whole financial and emotional ecosystem, taking care of aging parents, as well as children and grandchildren, it can be very hard to move.

Is this sort of a new normal in that what we call "full employment" is really not at all "full" but very uneven?

Yes, we can say now that for younger, tech-savvy, well-educated people, jobs abound. The recession truly is over. And 2016 should be a great year for job hunting. But for people in their 50s with rusty skills or teenagers with relatively little education, the phrase "full employment" is a painful taunt.

Copyright 2021 NPR. To see more, visit https://www.npr.org.

Marilyn Geewax is a contributor to NPR.