Last Friday the Bureau of Labor Statistics reported that the unemployment rate dropped to 3.7 percent in September, a low not seen since 1969. Many of us (including me, I was born in 1969) have never seen the unemployment rate this low in our entire lives. This is great news for America. But it’s also a problem—and an opportunity.
The problem is that we may think we don’t need to be concerned about unemployment. In a sense, this is true. There’s certainly no need to be pessimistic, for even if we soon have a recession the jobless rate is not likely to return to where it was a decade ago. But because we don’t foresee it as a problem, we won’t make it a priority. And being concerned about unemployment should be a priority for all compassionate, free market enthusiasts.
The reason why is because of the outsized effect unemployment has on human flourishing. As Bryan Caplan said several years ago:
When workers don’t get a raise, they’re often disappointed or angry. But when workers lose their jobs, they literally weep. For most of us, a job isn’t only a paycheck. A job also provides a sense of identity, purpose, and community. Happiness research strongly supports this fact, but introspection should suffice. Think about the shame and despair you’d feel if you were suddenly unable to support your children.
Caplan also righty notes that those who support free market approaches should be especially dismayed by the cultural and political effects of unemployment:
When every able-bodied worker can easily find a place to sell his skills, the economy reveals a clear connection between moral desert and practical success. You can fairly dismiss many complaints about capitalism by harumphing, “Get a job!” Workers can proudly tell statist activists and intellectuals, “I don’t need your charity. I can take care of myself just fine.” Once people lose their confidence that every able-bodied person can easily take care of himself, this individualist ethos withers – and the welfare state grows like a weed.
Instead of downplaying the grave evil of unemployment, we free-market economists should urge governments to redouble their efforts to fight it. How can we do so and remain free-market economists? First and foremost, by emphasizing the obvious: Every government imposes a vast array of employment-destroying regulations. Minimum wages. Licensing laws. Pro-union laws. Mandated benefits – especially mandated health insurance. Anyone who appreciates the grave evil of unemployment should bitterly oppose these regulations – and vigorously reject the cavalier, callous view that a heavy-duty safety net is a good substitute for a job. Government regulation is hardly the sole cause of nominal wage rigidity, but it definitely makes a bad situation worse.
The time to advocate for such policies is now. If we can’t roll back these job-killing policies when employment remains high, we aren’t likely to have much success when the level of unemployment begins to increase. We need to fight now, not only for the future unemployed but to prevent more Americans from becoming unemployed in the future.