A couple of weeks ago I was driving out to Ikea and The Offspring's 1998 song "Why Don't You Get A Job?" came on the radio which got me thinking, naturally enough, about full employment. Full employment is an idea that's very important to me, but it's something that's existed so rarely since 1975 that I think a lot people lose site of what it means and entails but popular culture from the late-nineties can be a good window into it.
One thing that full employment means is that the basic taunt of the song's speaker—nah nah why don't you get a job?—made perfect sense. In the late-nineties an able-bodied person who wanted to earn money could reliably do so simply by going out and getting a job.
That was the meaning not just of the low unemployment rate but also of the high and rising employment to population ratio. With a high demand for labor, it's relatively easy for workers to bargain for raises. But some businesses are genuinely low margin and can't really stay in business while raising wages. Those employers tended to lose workers who would shift to higher productivity higher margin employers that could afford to pay more, and they were forced to take risks on the kind of workers who'd be considered "unemployable" during a weaker labor market. Anyone, in other words, could go out and get "a job." Not a good job, necessarily, but a job because low-wage employers were forced to think outside the box.
Over the weekend I also re-watched 1999's Go, a film that likewise illustrates the full employment economy of the time. A key plot point is that Ronna needs money fast and so she's working tons of shifts at the supermarket. She's hardly in Eden. It's not a very pleasant job and it doesn't seem to pay very well. But the point, again, is that she has a lot of freedom to pick different points on the income/leisure tradeoff scale. Her friend Simon (thanks to illicit earnings as a drug retailer) has less need for funds, so they're able to simply swap. She'll do more work and he'll do less work, and in exchange she'll earn more money.
An important think to note is that simple classical and neoclassical models of the economy operate with the assumption that things are like this all the time. On the one hand, that's clearly false. The world in 2012 doesn't work like that. But it's not an impossible scenario either. The has worked like that in the past and could work that way again in the future if we had the right policy commitments.