FAQs

At Employ America, Full Employment is our north star. 

Full employment isn't defined by a single indicator or specific value. A full employment economy is one where wage growth is strong, working conditions improve, and economic opportunities expand to include individuals who are typically marginalized or face barriers at work. It’s an economy where where employers vigorously compete for workers It’s an economy where everyone who wants to work can find a job where they can make real contributions to economic growth, resilience, and shared prosperity.

We track multiple metrics to assess the state of the labor market from all angles., We pay close attention to prime-age (25-54) employment rates, various wage growth measures, and job dynamism indicators like quits and hires. We also analyze disaggregated data by industry and demographic groups, as these can reveal important labor market trends not apparent in aggregate statistics.

At Employ America, our work involves both measuring how far we are from full employment and advocating for policies that help achieve and sustain it. We develop frameworks to analyze employment data and engage with policymakers—particularly the Federal Reserve—to advocate for preemptive action against recession risks. 

The benefits of full employment extend beyo9nd the labor market. Full employment provides the foundation for productivity gains as businesses invest in efficiency-enhancing equipment and workers find better, higher-productivity jobs. This sustained productivity growth is key to economic growth and allows wages to rise without stoking inflation. Full employment isn't just good for workers—it's the most stable foundation for economic growth, resilience and prosperity.

Inflation hurts producers and consumers alike by reducing the purchasing value of hard-earned dollars. When prices increase faster than wages, families find that their paychecks don't stretch as far as they used to. Meanwhile, businesses face rising costs for materials, energy, and labor, all of which can stymie investment and slow growth.

When inflation rises above the Federal Reserve's target of 2%, their usual response is higher interest rates. These higher rates make borrowing more expensive, which slows business investment, reduces hiring, and cools consumer spending. In essence, the Federal Reserve looks to fight inflation by deliberately slowing down the labor market. This conventional approach to inflation control relies almost exclusively on weakening employment conditions and wage growth—directly threatening the full employment economy we work to achieve.

At Employ America, we develop alternative anti-inflation strategies that preserve labor market strength. Rather than accepting that inflation must be fought by sacrificing jobs, we advocate for policies that target specific price pressures without harming employment. Our work has included proposals to use the Strategic Petroleum Reserve to stabilize energy markets after Russia's invasion of Ukraine, measures to alleviate pandemic-related supply chain disruptions, and policies to enhance domestic productive capacity in critical sectors. By identifying and addressing the root causes of inflation—whether in healthcare, housing, or energy markets—we offer policymakers precision tools as alternatives to the blunt instrument of interest rate hikes.

We support these policy recommendations with detailed, component-level analysis of inflation trends. Our research team disaggregates inflation data to identify exactly which goods and services are driving price increases and why. This granular approach allows us to predict inflation trajectories and “nowcast” with remarkable accuracy—our forecasts have been published in the Wall Street Journal and have outperformed predictions from several prominent financial institutions. By understanding precisely where inflation comes from, we are able to design targeted responses that combat rising prices without sacrificing the benefits of full employment that American workers deserve.

Our sectoral approach to economic analysis evolves directly from our monitoring of inflation and labor market trends. By closely tracking both inflation components and employment data, we've identified that certain sectors consistently play outsized roles in shaping macroeconomic outcomes. This detailed sectoral lens allows us to connect the broader domains of inflation and employment to specific policy interventions at the sector level, creating more targeted and effective solutions for achieving full employment and price stability simultaneously. Our work focuses on sectors that have an outsized impact on the macroeconomy, such as energy, healthcare, housing, manufacturing, and finance.

Energy is required to power the entire economy – oil and gas go into the production, distribution, and consumption of almost every good and service in the world. Energy price shocks can lead to both inflation and even recessions. 

Healthcare is the largest employment sector in the country, as well as the largest government expenditure category. Healthcare services comprise a large share of the Personal Consumption Expenditure (PCE) basket so it has a large role to play in overall inflation. Healthcare costs also have a large influence on the cost of labor due to the prevalence of employer-sponsored health insurance.

Housing has major implications for employment, inflation, and financial market stability. Moreover, homeownership has historically been a primary engine for household wealth creation in the United States. Housing market activity - whether people are buying, selling, and building homes - is a leading indicator for the broader economic cycle. 

Manufacturing has major implications for output, investment, and the productive-capacity of the US economy. Maintaining an edge in manufacturing in strategically important - and emerging - industries such as aerospace and semiconductors is relevant for national security reasons, in addition to promoting economic stability and activity. 

The financial system is the engine of economic activity. It is how monetary policy gets transmitted, endogenously determines how much money is in the economy, and enables investment, employment, and output. Financial stability is crucial for broader macroeconomic stability.

Despite our detailed sectoral focus, macroeconomic policy remains the central pivot of our work. Macroeconomic policy shapes the broader conditions that determine whether we can reach and sustain full employment. These tools influence interest rates, inflation, investment and hiring decisions, and ultimately the strength of the labor market across all sectors.

Before Employ America's launch, macroeconomic policy was largely absent from Washington DC's advocacy landscape. Despite its enormous scope and impact, macroeconomics had been relegated primarily to academic settings, because it is highly technical, requires specialized expertise, and often seems disconnected from everyday concerns. We recognized this gap as both a challenge and an opportunity. By diving into this complex space, we could bring much-needed technical expertise to policy conversations and advocate for approaches that prioritize full employment and broadly shared prosperity.

The consequences of macroeconomic policy failures and successes are profound and long-lasting. The Great Recession demonstrated how inadequate macroeconomic responses can lead to prolonged suffering—with unemployment remaining elevated for years, wages stagnating, and economic scarring that affected an entire generation. In contrast, the pandemic response showed how bold, coordinated macroeconomic action could fuel a remarkably swift recovery, achieving historic levels of employment that many economists once thought impossible. These contrasting examples underscore why we remain committed to developing comprehensive macroeconomic frameworks that can respond to the inevitable shifts in economic conditions and uncertainties while maintaining our core focus on full employment.

Fiscal policy—the government's approach to taxation and spending—is one of the most powerful tools available for achieving and maintaining full employment. When strategically deployed, fiscal measures can directly create jobs, stimulate private sector growth, and provide crucial support during economic downturns. Unlike monetary policy, which works indirectly through interest rates, fiscal policy can target specific sectors, regions, or populations that might otherwise be left behind in the broader economy. This precision makes fiscal policy essential to our mission of creating a robust, full employment economy.

At Employ America, we've developed a "macroprudential" approach to fiscal policy that looks beyond simple stimulus measures. This framework balances the goals of full employment and price stability by addressing potential bottlenecks before they trigger inflation. Macroprudential fiscal policy has two key components: anti-recessionary measures that stabilize demand when the economy weakens, and industrial strategy that builds productive capacity in critical sectors. By simultaneously supporting consumption and enhancing production, this balanced approach enables robust economic growth without generating excessive inflationary pressure—allowing us to sustain full employment over the long term.

Recent history has demonstrated the effectiveness of this approach. During the pandemic recovery, anti-recessionary measures like enhanced unemployment insurance and stimulus payments prevented a prolonged downturn by maintaining consumer spending power. Simultaneously, historic investments in industrial strategy through the CHIPS and Science Act, the Infrastructure Investment and Jobs Act, and the Inflation Reduction Act are expanding domestic production capacity in critical sectors like semiconductors, clean energy, and infrastructure. These complementary policies have helped the U.S. achieve a remarkable economic recovery while beginning to address the supply constraints that contributed to inflation. Our ongoing work refines this framework to ensure fiscal policy can continue supporting full employment while maintaining economic stability.

Monetary policy works primarily by changing interest rates throughout the economy. When the Federal Reserve raises or lowers its benchmark rate, it creates a ripple effect that influences borrowing costs for everything from mortgages and auto loans to business investments and credit cards. These interest rate decisions are one of the most powerful forces shaping the economic landscape—affecting both inflation and employment simultaneously, but not always in ways that balance these two critical goals.

These interest rate changes directly affect the hiring and investment decisions of companies across all sectors. When rates are lowered, businesses find it less expensive to borrow for expansion, purchase equipment, or increase staffing. Conversely, when rates rise, companies often postpone investments, slow hiring, or even reduce their workforce as borrowing becomes more costly and consumer demand cools. This direct link between monetary policy and employment decisions makes the Federal Reserve a critical player in determining whether we achieve and maintain full employment.

The impact of monetary policy decisions depends greatly on the existing economic context. Good monetary policy will make a strong economy stronger—allowing robust job creation without triggering excessive inflation by keeping rates appropriately accommodative. However, bad monetary policy can make a weak economy weaker—such as when rates are raised prematurely during a fragile recovery, choking off job growth before all segments of the population have benefited from economic expansion. At Employ America, we advocate for monetary policy approaches that prioritize achieving genuine full employment while using more targeted tools to address inflation pressures that arise from specific supply constraints rather than broad-based labor market strength.

Full employment is a powerful driver of productivity growth across the economy. When labor markets are tight and workers are in high demand, companies are compelled to invest in labor-saving technologies, improve processes, and enhance worker training to boost output per hour worked. These investments might seem optional during periods of high unemployment, but become necessary competitive strategies when talent is scarce. Additionally, full employment facilitates a more efficient allocation of labor—workers can move from lower-productivity positions to roles that better utilize their skills and potential, further enhancing overall economic productivity. This dynamic process of innovation and better matching creates a virtuous cycle that strengthens the economy's productive capacity.

Productivity growth, in turn, validates and sustains full employment by providing the economic foundation for rising wages without triggering inflation. When workers produce more value per hour, businesses can increase compensation without necessarily raising prices. This relationship is fundamental to achieving both shared prosperity and price stability. Without productivity improvements, wage increases eventually translate to higher costs and prices, creating inflationary pressure that might prompt restrictive monetary policy. With robust productivity growth, however, the economy can maintain full employment with rising real wages and stable prices—the ideal combination for broadly shared economic well-being.

Contrary to some conventional economic analyses, recessions do not enhance true productivity. While productivity statistics may temporarily rise during downturns as businesses rapidly shed their least productive workers and operations, this reflects a measurement illusion rather than genuine economic improvement. The deeper reality is that recessions substantially damage long-term productivity by reducing business investment, interrupting worker skill development, and misallocating human capital. Research shows that the investment declines during recessions are not quickly recovered, creating persistent productivity gaps that can last for years or even decades. By working to prevent unnecessary recessions and maintain full employment, we promote the sustained investment and innovation that drive genuine productivity improvements and lasting prosperity.