Does America need more unemployment?

American summers, known for baseball games, roasted marshmallows and county fairs, have acquired new traditions: pools missing lifeguards, camps in need of counsellors and restaurants desperate for waiters. These shortages matter for more than just the businesses concerned. Over a year into the Federal Reserve’s fight against inflation, the state of America’s labour market has taken on extraordinary importance. Its health is a crucial indicator of whether the battle is being won or lost.

Initially the covid-19 pandemic was to blame for many of the workforce gaps, since people were less inclined to...