What is full employment and why is it difficult to measure?

In lay terms, full employment means that everyone who wants a job has a job. But in a national economy, some unemployment is expected, and even necessary; so, full employment is often defined more broadly as the highest reasonable expectation of employment as a whole.

In order to measure employment and unemployment, the Department of Labor has to decide which people should be measured. It does this by defining the civilian labor force as the noninstitutionalized population who are between the ages of 16 and 65, who live in the 50 United States or Washington, D.C., who aren't on active military duty, and who can be classified as either employed or unemployed. Noninstitutionalized means that a person is not in prison, in a mental facility, or in a nursing home.

The Department of Labor also defines an unemployed person: All persons who have no employment, are available for work (excluding temporary illness), and have made specific efforts to find employment during the four weeks leading up to when the measurement was taken.

Right away, you can see some measurement problems. Employment statistics don't include those under 16 or over 65 who have jobs. They also don't include statistics for those U.S. territories that fall outside the 50 states, such as Puerto Rico and the U.S. Virgin Islands. Also, if someone holds multiple jobs, they are counted only once. So employment statistics don't measure the entire U.S. work force or the total number of jobs being held.

Another problem is that employment and unemployment rates are moving targets, with seasonal ups and down. In the cold months of January and February, unemployment rates go up because little farming can be done and fewer construction jobs are available. Consequently, when springtime arrives, unemployment drops as these areas swing into business.

Then in June, when college students flood the job market - either for a summer job or to start a career after graduation — both employment rates and unemployment rates go up. During the school year, most college students can't be classified as unemployed (or employed, for that matter) because they aren't actively looking for work. When school lets out, more people are suddenly looking for jobs; those who don't find them raise unemployment levels, and those who do find them raise employment levels.