American Unemployment

This book shows that full employment has been rare in the United States in the last 150 years; excessive unemployment has been the norm. Against prominent economists who argue that unemployment is voluntary choice, it shows by analysis and many stories that being unemployed is painful and not something people choose lightly. It argues that hidden unemployment and a continuing labor surplus help explain why average real wages in 2019 are not much above their level of the early 1970s. The book locates consequential ideas about unemployment on a continuum between two opposing views. The free-market view holds that except for external shocks or government mistakes, significant unemployment is rare. People can always find jobs. But the historical record tells another story. For example, with mostly laissez-faire conditions, there were six major depressions from 1873 through 1933.The opposing view is that the business system naturally generates excessive unemployment, and at times depressions with catastrophic levels of joblessness. The book shows how the second model fits past and present facts. It also argues that the official unemployment rate, whose creation in the 1940s was an advance for economic policy, underestimates real unemployment and lessens the impetus for job-creation programs. And that’s a problem. Because many employers are happy with a labor surplus, and because tax cuts for the rich do not create many good jobs, this book argues that only direct job creation by the federal government—financed partly by taxes on the rich—will bring high-wage full employment.