David Leonhardt’s column – on the front page of the Business Day section of The New York Times – is something you should get in the habit of reading every Wednesday.
This week, he looked at how recoveries differ around the world: GDP and profits are recovering more quickly in the U.S., while employment is recovering more quickly in other countries.
He offers some speculation about why that might be, but nothing very definitive.
His biggest argument is that we’ve had 3 “jobless recoveries” in a row because labor markets are dominated by management decisions in this country. Maybe so.
One thing he doesn’t discuss – and I wish he had – is labor force participation in the various countries. Labor force participation rates tend to be quite high in the U.S., and perhaps this means we have more workers who are only tenuously attached to the workforce in the first place. But, I’m speculating …
Don Boudreaux at Cafe Hayek has a good response to Leonhardt's position:
ReplyDelete"If American employers are so powerful, why are real wages rising despite high unemployment? One explanation is that employers magnanimously pay more than they must to get the workers they need. A better explanation is that competition for workers remains intense. If true, this fact suggests that workers are not so interchangeable as they are believed to be by Mr. Leonhardt and others who advocate simplistic programs to “share” existing jobs.
Unemployment will fall only when new jobs – new opportunities – are created for the specific talents of workers now unemployed. Surely if businesses were as powerful as Mr. Leonhardt asserts, they would already have jumped at the opportunity to profit by tapping into the talents of today’s millions of unemployed Americans."
Read the whole thing.