I understand and kind of agree with the idea that there is some small amount of unemployment that is practically unavoidable, however, I’m not sure that 4% is it. Per the latest US employment report, we’re at 3.8%. So, it seems like we should set the limbo bar lower than 4%.
That report also breaks down the unemployment rate by demographic and it seems to vary significantly between groups. To say that we are at full employment when blacks and hispanics have about 2% greater unemployment than whites and asians seems incorrect. The minimum practical unemployment rate for all of these groups should be the same. So, if we’re going to adjust OT in order to help achieve full employment, we should be looking at the unemployment rate for the most unemployed race/gender group.
There are also of course problems with how unemployment is measured and calculated, but I suppose that’s a little besides the point.