I’m glad that Jared Bernstein is blogging regularly now, because hopefully now that both of the authors of The Benefits of Full Employment: When Markets Work For People have blogs we can get to talking more about the benefits of full employment. For example, you know how progressive commentators are always yakking on and on about how median household incomes haven’t kept up with GDP growth? It’s an important point, but I think one that tends to get over-thought.
This chart explains almost all of it:
Once upon a time, the Fed sometimes let unemployment get “too high” and sometimes let it get “too low” relative to the sustainable full employment rate. But since 1980, the Fed has done a nearly perfect job of stopping inflation, but has failed to eradicate elevated unemployment. This asymmetrical missing of the target essentially ensures that wage growth will be sluggish.