> ... while the American economy has come back > more robustly than some of its global rivals in terms of overall > production, the recovery has been strangely light on new jobs, even > after Friday’s better-than-expected unemployment report. American > companies are doing more with less.
Comparing the US to Europe or Japan in terms of "coming back" "robustly" is setting the bar pretty low, no? > “This still is a very big puzzle,” said Lawrence F. Katz, a Harvard > professor who was chief economist at the Labor Department during the > Clinton administration. He called the severe downturn in jobs “the > million-dollar question” for the economy. I don't get why it's a puzzle at all. Stagnant employment is what is to be expected. In the short run (i.e., over several years, such as from 2009 to the present), the availability of jobs at the macro level is determined by the demand for real GDP. According to Okun's rule of thumb (for the US), in order to keep the official U3 unemployment rate from rising, real GDP must grow at about 3 percent per year or faster. That kind of growth hasn't happened; the economy has generally been growing at stagnant rates (about 2 percent per year). The highest GDP growth rate since the "Great Recession" was 2.4% per year in 2010; the rate has fallen since then. This miserable growth rate tells us that (all else constant), U3 should have risen, perhaps by half a percentage point (following Okun). The fact that U3 has instead fallen reflects the dramatic shrinkage of the labor force. The employment/population ratio has stayed roughly constant since the beginning of 2010 (after a dramatic fall during and immediately after the NBER recession). The only way this can happen with employment rising relative to the labor force (and U3 falling) is for the labor force to fall relative to the population and for the quality of jobs to fall. The former is explained by the big surge in the number of discouraged workers, who aren't counted as part of the official labor force. The latter (a fall in the "quality of jobs," for lack of a better term) refers to the increase in the prevalence of part-time jobs, which means that the number of workers counted as "employed" rises relative to the number of hours of labor-power employed. (The percentage of the labor force that counts as "involuntary unemployed" rose during the Great Recession and has generally stayed high.) It's worse than that. Despite stagnant demand, measured labor productivity has risen. This is not due to improvements in technology (which raise the effectiveness of labor) as much as increases in the intensity of labor. New techniques that increase labor's effectiveness usually involve fixed investment, which is discouraged by stagnant demand. But the effectiveness of labor can rise either because people are working harder (trying to keep their jobs) or because the importance of labor-hours that aren't paid has risen. The latter aren't counted in the denominator of the formula for labor productivity but raise the numerator. As the article says, "American companies are doing more with less." -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
