AMONG THE PROPOSALS put forward last week by the Catholic bishops is the idea of trying to confine unemployment to 3 or 4 percent of the labor force. At this level, almost every worker wanting a job could find an acceptable one without having to look around very long. Not all that many years ago, this happy state of "full employment" was the economist's goal -- it is still an official government objective. But achieving it is no longer considered a live possibility. Should that be so?
Economists will tell you that, desirable as it may be, full employment can't be reached without producing intolerable side effects. To make employers want to hire almost everyone wanting a job, you'd have to use fiscal and monetary policy to stimulate the economy to such a degree that wages and prices ould spiral upward. And because high inflation creates uncertainty for businesses and investors, the effort would probably boomerang into a recession.
Economists, however, tend to overlook other kinds of private and public policies that could produce more jobs, or at least a fairer distribution of work-related income, without fueling inflation. It's much harder to incorporate the effects of these policies in the computer models that are the stock-in-trade of modern economics. But the effects are no less real.
For example, Japan and, until the last decade, West Germany enjoyed both fast growth and low inflation because employers and workers were willing to cooperate in holding wages and prices in line. That sort of mutual restraint is alien to the Anglo- American tradition of adversarial labor-management relations. Foreign competition, however, has convinced many U.S. companies and their workers that fighting each other is a luxury neither can afford. If this trend is encouraged, economic policymakers could afford to run the economy in higher gear without reigniting inflation.
The U.S. tax system also penalizes employers heavily for adding workers and rewards them for adding machines. Reducing that bias might also open up more jobs without sacrificing efficiency.
Raising minimum wages would be another way to reduce poverty without increasing reliance on welfare. But too much of a boost in the minimum wage will cost the economy jobs and stimulate inflation. A better approach would be to pay wage supplements, probably through the tax system, to breadwinners whose earnings don't meet their families' needs.
A wage supplement, however, won't help someone who has no job. And, given rapid industrial change, some workers aren't going to be able to find jobs even in a fast-growing economy. The last time unemployment got below 6 percent, the country had a substantial public service jobs program in place. It didn't run long enough to get working very well, but the jobs didn't look like failures to the people to whom they provided income and self-respect.