Indications are that when the Bureau of Labor Statistics releases its unemployment figures Friday the news may be slightly less grim than it has been for the past several months. The most optimistic prediction in a Reuters survey of 70 economists is that perhaps only 530,000 layoffs occurred in April, which would lift the official unemployment rate to 8.7%.

Compared with the 663,000 jobs lost in March, and similarly high numbers for the past several months, this would be good news. Unless, of course, you are one of those hundreds of thousands of new layoffs. But the more likely figure for last month will come in somewhere just above 600,000. This would take us from an 8.5% to an 8.9% official unemployment rate, the worst in 26 years. Whatever the official rate turns out to be, however, an alternative BLS gauge of unemployment will surely clock in at 16% or more. That gauge includes Americans who have become so discouraged at finding a job they’ve given up and those who work part time only because they can’t find a full-time job.

While many economists and other observers seem to be sniffing the bottom of the trough of what has just became the longest running downturn since the Great Depression, probable long-term effects of this crash won’t smell sweet.

As Matthew Benjamin and Rich Miller of Bloomsberg wrote Monday:

Post-recession America may be saddled with high unemployment even after good times finally return. Hundreds of thousands of jobs have vanished forever in industries such as auto manufacturing and financial services. Millions of people who were fired or laid off will find it harder to get hired again and for years may have to accept lower earnings than they enjoyed before the slump. This restructuring -- in what former Federal Reserve Chairman Paul Volcker calls "the Great Recession" -- is causing some economists to reconsider what might be the "natural" rate of unemployment: a level that neither accelerates nor decelerates inflation. This state of equilibrium is often described as "full" employment. Fallout from the recession implies a "markedly higher" natural rate of unemployment, says Edmund Phelps, a professor at Columbia University in New York and winner of the 2006 Nobel Prize in economics. "It was 5.5 percent; maybe it will be 6.5 percent, maybe 7 percent." ... People who lost stable work in the early 1980s sustained large and long-lasting earnings reductions, according to research by economists Till von Wachter of Columbia University, Jae Song of the Social Security Administration and Joyce Manchester of the Congressional Budget Office. A typical 40- year-old man who became unemployed at the time went on to suffer a 20 percent loss in lifetime earnings, they found. ... "People losing their jobs now in permanently downsizing industries have to be aware that they’re particularly at risk of pretty large losses" to lifetime wages, says von Wachter, who briefed staff at the Fed and the European Central Bank last month on the effects of mass layoffs. "People tend to think that when you come out of a recession you get the labor market you had when you entered it," says Lawrence Mishel, president of the Economic Policy Institute in Washington. "This time you may get something quite different."

Unless you're in the top 20%, and even if you are, you probably are acquainted with some people in this predicament. You may be one.

There was a time, starting with the New Deal, when full employment was considered a moral imperative. Some legislation even included the words: the Humphrey-Hawkins Full Employment and Balanced Growth Act of 1978, for instance. But, World War II aside, when we were beyond full employment, we’ve only approached something that could reasonably wear that label during the 1960s, with assistance from the wars in Southeast Asia, and in the late 1990s, during the dot.com bubble.

The "natural rate of unemployment" (NAIRU) was invented by economist Milton Friedman. That concept - along with his consequent laissez faire prescriptions for deregulation, taxation, and monetarism over fiscal policy as the prime government mover of the economy - became conventional wisdom with the ascendancy of Margaret Thatcher and Ronald Reagan.

Previously, a balance had been sought between stabilizing employment and prices. But beginning with the Thatcherite/Reaganite shift, as Thomas Palley, director of the Economics for Democratic & Open Societies Project, wrote in 2007, "rising wages are actually viewed as cause for concern on the grounds that they may be inflationary, but the same standard is never applied to rising profit rates."

Lost in the upward transfer of wealth that these policies generated was the New Deal-Great Society approach that favored full employment. Inflation is the key enemy, claimed the Friedmanites and their allies, and full employment – that is, anything above the natural rate of unemployment – is bad because it drives inflation. So when folks start talking about a natural rate of 6% or higher, you know what they’ve got in mind.

The effects of the Thatcherite/Reaganite policies have been widely tallied.

Wages have been delinked from productivity growth, putting the gains from this growth into the hands of the well-heeled and worsening income inequality. From 1959 to 1979, wages were tied to productivity, but in the past 30 years, with brief exceptions, productivity has grown while hourly pay has stagnated. Indeed, males in the bottom quintile have seen their real wages fall. Measured by family income, the productivity growth "dividend" has wound up almost exclusively in the hands of the top 20%.

Unfettered globalization has off-shored tens of millions jobs, reducing U.S. manufacturing, the original source of the American middle class and of post-1945 prosperity, and contributed to union busting, which has reduced workers’ already reduced ability to bargain for a fair share of the benefits of productivity growth.

As a consequence of this and other bad labor trends, the typical American worker outside that top 20% is more likely to be, as Palley wrote, at more risk "of job loss, permanent wage reductions, reduced length of job tenure, reduced health care coverage or increasing health care costs, and greater retirement income security risk owing to the shift away from defined-benefit pension plans to defined-contribution plans."

According to the "natural rate" theory, the Federal Reserve can do nothing about any of this, and it shouldn’t try. No stimulative Keynesian methods should be tried either because they raise inflation.

Palley again:

Indeed, the situation is even worse because of the Fed’s asymmetric approach to nominal wages. When wages lag prices, the Fed sits on its hands, albeit with expressions of sympathy for workers. However, when wages outrun prices, the Fed stands ready to raise interest rates on the grounds that rising unit labor costs are inflationary. ... the theory of the natural rate contributes to driving the so-called "labor market flexibility" agenda that attacks unions, the minimum wage, and employment and worker protections. The logic is that these institutions prevent wages from adjusting downward, and thereby increasing the natural rate of unemployment.

Twisted, eh? Unless, of course, you’re an oligarch or otherwise ensconced in the top 20%.

Many progressives view full employment as mostly a matter of short-term fiscal stimulus. But reworking interest rates, trade deficits, budgetary policy, globalization, taxation and currency exchange rates must also be a component of any policy of sustained full employment in the 21st Century, as Palley lays out in considerable detail.

That daunting list of needed changes points to a full-blown overhaul of U.S. economic policy. In every society in every era, that is the hardest thing to do. It touches on people's deepest beliefs but most of all on their self-interests. Faced with even modest reform, those with clout will erect well-funded obstacles to the reformers. The situation is made all the more difficult right now because many of those Democrats who might otherwise be predisposed to making changes are held back by their acceptance of the accumulated myths associated with existing economic policy.

Short of making the most difficult economic changes, however, there is the matter that even blue-dog Democrats ought to be able to handle without flinching: establishing the government as employer of last resort. FDR put together programs to do that. They weren't enough, but they pointed in the right direction. L. Randall Wray at The Levy Economics Institute writes that:

... no capitalist society has ever managed to operate at anything approaching true, full, employment on a consistent basis. Further, the burden of joblessness is borne unequally, always concentrated among groups that already face other disadvantages: racial and ethnic minorities, immigrants, younger and older individuals, women, people with disabilities, and those with lower educational attainment. Since markets do not operate to achieve full employment, and because markets tend to leave behind the least advantaged members of society, government should and must play a role in providing jobs to achieve social justice. Proponents of a universal job guarantee program operated by the federal government argue that no other means exists to ensure that everyone who wants to work will be able to obtain a job.

There is no natural rate of unemployment. But there is a natural – that is, fundamental – right to work. The social and economic costs of unemployment – lost income, crime, broken families, physical and mental health problems, interrupted educations, shattered retirements, social unrest – ought to be plenty to make providing full employment a slam dunk for politicians supposedly in tune with their constituents. It shouldn’t take an economic catastrophe to press this point home. But since we’re afflicted with one now, it would be encouraging to see more Democrats take Rahm Emanuel’s words to heart: Never let a serious crisis go to waste.