How Much Unemployment Do We Need?

In his presidential campaign in 1960, when the average number of unemployed workers was 3.9 million, John F. Kennedy made unemployment one of the major issues and promised to “get this country moving again.” After Kennedy won the election, there was a national debate about how best to reduce unemployment; but scarcely anyone questioned the basic proposition that a total of around 4 million unemployed workers was intolerable.

During calendar year 1975, the total number of unemployed averaged 7.7 million workers, or 8.5 percent of the labor force, and Administration spokesmen “projected” unemployment rates well above most postwar recession highs for most of the late 1970s. Yet the public discussion of the une...