The Federal Reserve has a dual mandate to both promote maximum employment and keep prices stable. Yet, the central bank cannot influence employment directly and it is notoriously hard to measure.

"It's hard to tell Americans we can have too many people working," David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, told CNBC.

Maximum employment is difficult to quantify. However, at the Federal Open Market Committee news conference in January 2022, Federal Reserve Chairman Jerome Powell announced that "labor market conditions are consistent with maximum employment."

Maximum employment is also difficult to quantify because existing measures of employment, such as the unemployment rate or the labor force participation rate, often do not account for certain groups of people.

Watch the video above to learn why the Fed does not always want everyone who wants a job to have one and what that means for inflation.

Chapters:
00:00 — Introduction
01:08 — How the Fed influences jobs
04:22 — Measuring employment
06:49 — Add it up

Produced and Edited by: Andrea Miller
Animation: Josh Kalvin
Supervising Producer: Lindsey Jacobson

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Why ‘Maximum Employment’ Feels Impossible In The U.S.