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Friday, May 30, 2014

'Hours Worked, No Change; Output, Up 42%'

Tim Taylor:

Hours Worked, No Change; Output, Up 42%: Here's one snapshot of how the U.S. economy evolved in the last 15 years: an identical number of total hours worked in 1998 and 2013, even though the population rose by over 40 million people, but a 42% gain in output. Shawn Sprague explains in "What can labor productivity tell us about the U.S. economy?" published as the Beyond the Numbers newsletter from the U.S. Bureau of Labor Statistics for May 2014. ...
A lot can be said about this basic fact pattern. Of course, the comparison years are a bit unfair, because 1998 was near the top of the unsustainably rapid dot-com economic boom, with an unemployment rate around 4.5%, while 2013 is the sluggish aftermath of the Great Recession. The proportion of U.S. adults who either have jobs or are looking for jobs--the "labor force participation rate"--has been declining for a number of reasons: for example, the aging of the population so that more adults are entering retirement, a larger share of young adults pursuing additional education and not working while they do so,  a rise in the share of workers receiving disability payments, and the dearth of decent-paying jobs for low-skilled labor. ...
The more immediate question is what to make of an economy that is growing in size, but not in hours worked, and that is self-evidently having a hard time generating jobs and bringing down the unemployment rates as quickly as desired. I'm still struggling with my own thoughts on this phenomenon. But I keep coming back to the tautology that there will be more good jobs when more potential employers see it as in their best economic interest to start firms, expand firms, and hire employees here in the United States.

    Posted by on Friday, May 30, 2014 at 08:28 AM in Economics, Productivity | Permalink  Comments (56)



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