Moving the Goal Posts

TO economists and politicians, "full employment" does not mean what the words suggest: a job for absolutely everybody who wants one. Instead, the working definition has long been a jobless rate no higher than 4%. Even by that measure, the U.S. has rarely enjoyed full employment since World War II; the last time was in the closing months of the Johnson Administration and the early days of the Nixon era. Now the President's aides are redoubling efforts to bring the jobless rate back from nearly 6% toward full employment by the elections. Instead of launching another new economic game plan, however, they are trying to move the goal posts.

Fired-Up Demand. The annual report of the President's Council of Economic Advisers in January discussed the 4% goal as if it were impossibly Utopian. A confidential Administration paper drafted by Herman Liebling, the Treasury's senior economic forecaster, says flatly that "a 4% unemployment rate as a national goal is not feasible without significant inflation." Liebling figures that a 5% rate "might represent the maximum benefit from cyclical expansion without unleashing unwanted inflationary repercussions." When the paper leaked last week, Liebling's boss, Treasury Secretary John Connally, went before the congressional Joint Economic Committee and dismissed it as merely a working paper. But Connally has admitted publicly that 5% unemployment "is probably the best we can do this year without further throwing the economy out of kilter."

On the surface redefining full employment from 4% jobless to something like 5% seems a cynical political move. In fact, there would be some economic logic behind it. More women, teen-agers and blacks are looking for full-time work now than ever before, and they often are unskilled and untrained. At the same time, the entire work force is growing so fast that the economy has not been able to produce enough jobs. In order to induce employers to hire enough new workers to bring the jobless rate down to 4%, the Administration might indeed have to fire up demand in the economy enough to rekindle inflation. Brookings Institution Economist George Perry notes that in the 1950s a 4% jobless rate was accompanied by price inflation of 2% a year, but that today it would result in almost a 5% annual rate of price boosts. The Administration's apparent target of reducing the unemployment rate to 5% by the end of the year, according to Perry's calculations, would be consistent with the President's goal of 2% or 3% inflation. Administration officials are reluctant to admit that higher than average unemployment among women, teen-agers and blacks is acceptable to them as long as white adult males--especially Republican-leaning white-collar workers--have jobs. But the implication is there.

To Democrats, however, the Administration's talk sounds like an attempt to divert public attention from high current jobless rates. Labor Secretary James Hodgson has said: "While eyes are often focused on the unemployment rate, employment is still on the march--steadily upward." In reply, Arthur Okun, former chief economic adviser to Lyndon Johnson and a member of TIME'S Board of Economists, told the Joint Economic Committee last week: "Heroin addiction can be a growing problem even though the number of nonaddicts increases." According to Okun, the biggest rise in unemployment in the past two years has not come among the young and female; it has been among males aged 20 or more, of whom there are 81% more without jobs now than at the end of 1969.

New New Deal? The most important innovation that Democrats like Okun want to see is a massive federal effort to hire the unemployed in public service jobs--an effort that would be reminiscent of the New Deal's Works Progress Administration (see box, page 63). That might provide jobs without heating the private economy to inflationary pitch. Nixon's Public Employment Program, launched last year, should create 150,000 jobs this year for hospital personnel, firemen, housing inspectors, sanitation men and other workers in state and local service. But PEP is clearly too feeble to put much of a dent in the nation's 5,000,000-strong army of unemployed. The President has already vetoed one more ambitious job-creating bill on grounds of cost, and Administration aides, speaking officially, are quick to criticize large-scale public works programs. In private, however, they may be more receptive. Edgar Fiedler, an Assistant Treasury Secretary, asks in one memorandum: "What is and can be done to put the unemployed to work for the Government a la the WPA?"

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