Full Employment?

Standing in line, marking time
Waiting for the welfare dime
'Cause they can't buy a job
--Bruce Hornsby & the Range

Several nice points made here by David Stockman regarding so-called claims of 'full employment.' One reiterates what these pages have previously discussed. There continues to be a huge divide between the 'headline' unemployment number (a.k.a. 'U3') and the labor force participation rate.

The number of people currently out of the work force amounts to nearly 17 million. More noteworthy is that that number has not declined despite 'generational lows' in the U3 number.

One would also think that if, as former Fed chair Alan Greenspan claims--that this is truly the tightest labor market that he has ever seen--that wages would be quickly rising per ECON 101. But that's not what we see. Average hourly earnings hourly earnings have gone nowhere for decades.

Full employment? Things just don't add up. Stockman suggests the problem relates to how unemployment is measured, which we'll discuss in an upcoming post.