The Full Employment and Balanced Growth Act

The Full Employment and Balanced Growth Act, also known as the Humphrey-Hawkins Full Employment Act, was a piece of legislation passed in 1978 as a means to combat the rampant unemployment and inflation that was facing the United States in the late 1970s. Unlike most other bills that came before it, the FEBGA established an overarching game plan for the government to address these problems, by issuing a timeline for fixing particular problems. For example, by 1983, the government was supposed to have reduced unemployment to under 3% for the workforce over the age of 20, with the inflation rate at or below 4%.

The late 1970s were a difficult time for the United States. An energy crisis was confronting the nation, and a phenomenon called “stagflation” was constricting an already too-tight economy. Stagflation is the combination of stagnation and inflation in an economy, previously thought to be impossible as inflation and unemployment seem to be opposite problems. However, as the 1970s proved, the two problems can happen simultaneously under certain economic circumstances. In that case, oil prices rose suddenly, while banks in turn employed over-stimulative monetary policy to try to fight the recession, causing widespread economic hardship.

To combat the problem, the government turned to Keynesian economics, an economic theory that supports government intervention in economics to counteract recession. The belief is that the government can influence demand-side economics by injecting investment money into private businesses as a way of lessening the shock of a sudden lack of private investment. That is, the government intended to replace with government spending the money companies were no longer receiving from private investors.

The FEBGA had four main goals, which were stated explicitly in the bill itself:

To meet these lofty goals, the bill advised the government to:

The Act also prohibited discrimination due to gender, religion, age, race, and nationality in any program that was established because of the Act. While the Act did not succeed in saving the country from the grip of stagflation, it did establish means to fight it.

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