Toles: There is No 'Rest of the Trick'
See also: Rising worker productivity, innovation boosts profits but may lessen hiring need, by Anthony Feld and Craig Torres (I think there's more to the delayed recovery of labor markets than just changes in productivity, but that's part of the story).
On the title, there is supposed to be a "rest of the trick," but it doesn't come until later. The idea is that the labor that is freed up from the increased productivity will be used to produce new goods and services thereby increasing the quantity and variety of the nation's output. In a dynamic, growing economy, even though there's a delay before the new jobs appear (and hence a need to help workers through the transition), the new jobs are supposed to be even better than the old ones. But as workers look forward, the fear is that that won't be the case. Workers who have lost jobs face an uncertain future where, if they can get new jobs at all, they are unlikely to pay as well or have the same level of benefits as the jobs they lost. New workers do not appear to have the same opportunities that their parents had, particularly workers without a college degree.
If workers could be assured that rising productivity would translate into better jobs and higher pay, the outlook would be different. But the last several decades of stagnant wages have undermined that promise. The growth that has occurred was not widely shared -- it did not trickle down as promised -- and the frustrations and uncertainties households have are understandable. It's a mistake to think that just because the economy starts growing again, all will be well. If the growth that occurs post-recession simply picks up where pre-recession growth left off, i.e. with income gains flowing mainly to the upper classes, and with even more income inequality than we have now, the frustrations and tensions will continue to build and our troubles will not have ended.
Posted by Mark Thoma on Saturday, November 27, 2010 at 12:00 PM in Economics, Productivity, Technology, Unemployment |
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