Congress has given the Federal Reserve two essential jobs, and we tend to hear quite a bit more about one of them. Promoting “stable prices” is the more talked about half of the Federal Reserve’s so-called “dual mandate,” especially these days when inflation is the biggest story in the economy.

The other part of the Fed’s dual mandate – “full employment” – doesn’t get as much press, and it’s harder to define. But both mandates are equally important to the Fed, and part of pursuing full employment is examining groups that are having trouble reaching it.

This season on Six Hundred Atlantic, we’ll look at what full employment is, and we’ll focus on two groups facing obstacles to it: women with children and people with criminal histories. We’ll also look at gig economy workers, who are having trouble being seen in official employment statistics at all.

JAY LINDSAY:

Congress has given the Federal Reserve two essential jobs, and we tend to hear quite a bit more about one of them.

Promoting “stable prices” is the more talked about half of the Federal Reserve’s so-called “dual mandate,” especially these days.

The stable prices mandate is all about controlling inflation, and the Fed’s efforts to do that have been the biggest story in the economy for a few years running.

The high inflation that emerged after the pandemic certainly isn’t the first time that the economy has struggled with rapidly rising prices. Ronald Reagan once compared the high inflation of the 1970s to a lurking criminal. He said, “Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.”

The other part of the Fed’s dual mandate – “full employment” – doesn’t inspire such colorful quotes. Full employment is essentially when anyone who wants to work can work as much as they desire. Here’s Boston Fed senior economist and policy advisor Chris Foote:

CHRIS FOOTE:

The full employment mandate is not getting as many people to work as possible. We don't want to drive up to the nursing homes where people are retired and say, ‘All right, everybody, let's get to work.’ There are many people who don't want to work, and that's fine. But I think what the full employment mandate, at least to me means, is that everyone who does want to work, everyone who does want to participate can find a job that allows them … that's commensurate with their skills, their abilities, and their preferences.

JAY LINDSAY:

Though the aim of full employment is fairly clear, it is difficult for economists to measure because it changes over time as the economy evolves. There’s also no single statistic, like the Fed’s well-known 2% goal for inflation, that identifies when full employment has been reached.

Federal Reserve Bank of Boston Research Director Egon Zakrajšek says the stable prices mandate is just easier to get a grip on.

EGON ZAKRAJSEK:

The notion of price stability is much easier to define. It is something that we measure very well.

The full employment mandate is, it's trickier.

JAY LINDSAY:

Zakrajsek emphasizes that both mandates are equally important to the Fed. And he says the mandates are closely connected and often complement each other – it’s difficult to durably attain full employment without stable prices, or have stable prices maintained over time when the economy is away from full employment.

But he adds achieving the two mandates at once is a complex task.

EGON ZAKRAJSEK:

You know, there's many kinds of pressures that's going on. And, ultimately, it's going to interfere with your other leg, a price stability mandate, right, that you have?

It's a delicate balancing act. It's not exact science. You need to be very vigilant. You need to be look at a … You need to be creative. You need to be looking at a wide variety of potentially conflicting signals and see, “Does this constellation of labor market indicators telling you that you can get people to work?”

JAY LINDSAY:

I’m Jay Lindsay, and this is Season 6 of Six Hundred Atlantic, a podcast produced by the Federal Reserve Bank of Boston.

This season, we’re focusing on the ideas discussed during the Boston Fed’s 67^th Economic Conference. The topic of the conference was – you guessed it – full employment.

The conference was named “Rethinking Full Employment,” and Foote helped organize it. He says one aim of the conference was to directly take on the fuzzier nature of the full employment mandate.

CHRIS FOOTE:

It is a more ambiguous concept certainly than stable prices. And the theme of the conference, “rethinking full employment,” was really an attempt to grapple with that and to say, “How do we think about full employment being generated in the economy through monetary policy?”

JAY LINDSAY:

Foote says studying groups facing barriers to employment is an important part of answering that question. And this podcast will focus on several of the groups discussed at the conference who face significant barriers to full employment – to working to their preferred maximum level.

One of those groups is women – particularly mothers. We’ll talk to two mothers who’ve stepped back from work because of the strain of balancing a career and caregiving.

Another group whose employment has been limited is people with criminal histories. One ex-offender tells us the hiring bias against her follows her around like a life sentence.

We’ll also discuss gig workers. We see Uber and Lyft drivers everywhere, but official employment stats are often blind to their labor market contributions – and to those of the many others working nontraditional jobs in the gig economy.

Foote says it’s important to call out and understand these obstacles.

CHRIS FOOTE:

The Fed sort of has to know where those barriers are in order to assess how well it's doing, what it does have the power to do.

JAY LINDSAY:

Indeed, what the Fed can and can’t do in pursuit of full employment is critical to understand – but is often misunderstood.

We know the Fed can use monetary policy to set interest rates in ways that influence the overall demand for goods and services in the economy.

For instance, lower interest rates make borrowing less expensive. That can motivate business growth and expansion, which often leads to hiring more workers. Thus, by lowering rates the Fed can help guide the economy closer to achieving the full employment mandate.

But there are certain things built into the economy – economists call them “structural factors” – that the Fed can’t control. Still, these factors can have an enormous impact on the economy.

Some examples of such structural factors are laws that restrict or promote a certain industry. Or how many people get college degrees, or don’t. Or how many young workers are entering the workforce, and how many older ones are retiring.

Because structural factors influence the level of employment, the Fed has to understand them even though it can’t directly affect them. Here’s Foote:

CHRIS FOOTE:

I think if you look at the topics that we chose at the conference, the participation of women, the participation in the economy of people with criminal histories, those are not policy areas that the Fed is directly involved in, but they are areas that affect the overall level of employment in the economy. And they’re areas where other policy institutions can come in and learn about and perhaps be influenced to undertake policies in their perspective realms.

JAY LINDSAY:

The Federal Reserve’s emphasis on full employment is fairly unique globally. Central banks often treat stable employment as an important policy objective. Yet unlike the Fed, other central banks typically don’t consider the goal of full employment to be just as important as the goal of price stability.

Foote says the Fed’s pursuit of full employment is essential to its pursuit of a healthy economy with stable prices.   

CHRIS FOOTE:

The rate of inflation matters. We've certainly seen that over the last few years. But just as important, if not more so, is that whether people who want to work can actually go out and find jobs. I mean, the job is central to people's economic livelihood, their self-image. Thinking about prices without thinking about employment, I think would be, in my own view, would sort of be an incomplete characterization of what the Fed ought to do.

Getting the economy to a position where people who want to work can find jobs that allow them to fulfill their economic potentials, to me sounds like a pretty good goal.

JAY LINDSAY:

All the quotes you’ll hear this season – including in this overview – were recorded in interviews in the months after the conference. And all the statistics, unless indicated otherwise, were presented by speakers at the conference or in papers submitted for it.

Some of the most surprising stats were in a paper looking at the obstacles to work faced by people with criminal histories.

One stat indicated that more than 1-in-10 adult males – 13 percent – has a felony conviction. And according to another stat, at any given time, half the unemployed have criminal histories.

These numbers indicate this population is large enough to make a significant economic impact. And one episode this season is dedicated to looking at what’s holding back people with criminal histories from more fully participating in the labor market.

Some of it is pure bias.

Sarah Rehman is a licensed psychologist whose criminal history began with a drunk driving arrest in 2016. She says her legal problems have trailed her since, despite efforts to rectify her mistakes and put it behind her.

SARAH REHMAN:

My charges will always come up. My criminal history will always come up.

It still follows you, and it feels like a life sentence, because you continually have to address that, and it continually comes up as a barrier.

JAY LINDSAY:

Efforts to help workers get past the stigma of their criminal histories have so far focused on keeping information about it away from employers – at least initially.

The idea is that the job prospect can start with a clean slate and be more fairly assessed by employers. But this approach, often called “ban the box,” hasn’t worked.

CHRIS FOOTE:

Many people who've researched this topic now believe that that Ban the Box policy, although it has a good intention, is ineffective. And it may actually have negative consequences.

JAY LINDSAY:

Economist Steven Raphael of the University of California at Berkley says labor markets suffer when workers who’ve already paid for their mistakes are forced to keep paying for them.

STEVEN RAPHAEL:

So, we don't necessarily want something that someone is arrested for and convicted for, is punished for, to then have collateral consequences that carry through for the rest of their lives.

JAY LINDSAY:

While employers struggle to look past the criminal histories of applicants, gig workers have trouble being seen at all. That’s the focus of another episode this season.

Many gig workers are employed in the app-based industries – think ride-share companies like Lyft and Uber.

Gig work can be a side hustle, but it can also be a main source of income, like it is for Boston ride-share driver Charles Clemons Muhammed.

CHARLES CLEMONS MUHAMMED:

And my motto is, if my tires don't roll, then the dough don't roll. Okay?

It's my main income, so it's very important that I can make between $1,000 to $2,000 a week.

JAY LINDSAY:

As critical as gig work is to Charles, it’s most likely being undercounted in official employment stats. In a paper presented at the conference, Boston Fed senior economist and policy analyst Mary Burke says that’s because of shortcomings in the key survey that measures U.S. employment.

Burke says without a better indicator of gig work numbers, policymakers don’t have a true picture of the labor market. That matters because the number of workers being missed is potentially significant.

Burke’s paper included an analysis that concluded the number of uncounted workers was as high as 7 million.

MARY BURKE:

So, again, as a share, the U.S. has a quite large population, it looks like a modest number of percentage points. But, yeah, you think, “Wow, that's actually a nontrivial number of people who are engaging in this kind of work and yet aren't getting counted.”

JAY LINDSAY:

But Burke notes a large uncounted population of working people isn’t necessarily good news for labor markets. She says there’s another side to the story.

MARY BURKE:

The other way of reading the results is that, wait a minute, the fact that people are having to do this work on top of already having a job suggests that there was hardship, there was sort of a hardship or something missing that they needed to compensate for. They needed to earn extra money.

JAY LINDSAY:

The title of this season of Six Hundred Atlantic, is “Rethinking Full Employment. What It Is, Who’s Unseen, and Who’s Been Left Behind.”

And if gig workers are the “unseen” in our title, then women join people with criminal histories as among those who often get “left behind.”

On the next episode of Six Hundred Atlantic, we’ll look at the barriers faced by working women. The episode examines a concerning trend: After rising steadily for decades after World War II, female workforce participation rates in the U.S. flatlined after the mid-1990s.

When the 1990s began, the workforce participation rate among U.S. women aged 25 to 54 – so-called “prime-age women” – ranked near the top of all industrialized countries. By 2019, it had slipped to near the bottom.

That hasn’t changed – even after recent gains moved the labor force participation rate of prime-age women above pre-pandemic levels.

There are numerous reasons the rate has fallen behind other countries, but a paper at the conference focused on two of them.

One is a lack of publicly funded “family policies” in the U.S. Those policies include things like child care and parental leave, things that give women with children time and flexibility to balance work and caregiving duties. Things that other nations have focused on supporting.

STEFANIA ALBANESI:

They have improved their family policies substantially. And in the U.S., there's virtually been no progress except for some programs in a few states, since the early '90s.

JAY LINDSAY:

The other barrier discussed at the conference was the rise of “performance pay.” It’s given for reaching some performance metric, like a certain level of a company’s stock price. And it really came to prominence in the 1990s.

Jobs that give performance pay are often lucrative, but they can demand 70- to 80-hour work weeks. Women caring for children can’t put in that kind of time. For some moms, the only choice is to step back from work and accept whatever career hit comes.

JESS LITTLE:

You can't have it all, and us as women, we're often told, “You can, you can have it all, you can have the career, you can have the family and this and that.” And you really can't. I think it's just a simple way to say, ultimately, you're going to realize what's important and how to kind of shift and make those things a priority.

JAY LINDSAY:

That’s next time, on Season 6 of Six Hundred Atlantic.

JAY LINDSAY:

Thanks for listening to Season 6 of Six Hundred Atlantic. You can find interviews and our first five seasons and subscribe to our mailing list at bostonfed.org/six-hundred-atlantic. And we'd love it if you would rate, review, share, and subscribe to Six Hundred Atlantic on your favorite podcast app.  

The producers would like to thank our contributors for their time and insights. They are Stefania Albanesi, Mary Burke, Chris Foote, Jess Little, Charles Clemons Muhammed, Steven Raphael, Sarah Rehman, and Egon Zakrajsek.

This has been “Rethinking Full Employment,” the sixth season of the Boston Fed’s Six Hundred Atlantic podcast.