Joseph Stiglitz, a Nobel Prize winning economist, discusses the current state of the economy - how spending and corporate profits are rising, usual signs of a recovery, but the unemployment rate is not going down. Ususally employment is the last thing to rise before the economy recovers. First there is more overtime and then firms realize they need to bear the cost of hiring and training a new worker. Overtime is not currently rising:
What happened last quarter is that the number of hours worked was down by almost 1 percent. In a jobless recovery, the typical pattern is that hours worked go up because jobs aren't being created. This is a recovery in which hours worked aren't going up. That suggests it may not be recovery.You're getting firms trying to squeeze more and more work out of workers, working fewer and fewer hours.
Or, more likely, firms are requiring many employees to work extra hours and simply not paying overtime for it. This is one advantage of salaried workers.
Another interesting dynamic of this economy is the type of jobs currently moving overseas: techical work. In the past, it has been the lowest-paid and least-productive jobs that have moved overseas, leaving the brain work in the U.S. Although the transition is painful, you could argue that leaves the U.S. in a better state: it encourages growth in highly paid white-collar jobs, while outsourcing the physical labor. Stiglitz remarks about the fallout from this trend:
And there is always going to be an anxiety as we go through that process. And in that process, it isn't obvious that we will be as relatively high-income as we have been in the past.
Given that the economy is driving by consumer spending, if relative income levels drop, this is not good for economic conditions in the country. Being in the cross-hairs, I have mixed feelings about this trend. I am rabidly free-market, so I believe that companies should be free to do business as they wish, provided they operate within the law. However, if a business's desire to cut costs conflicts with the will of the people to have good jobs, then the government sure as hell shouldn't be giving any tax breaks or incentives to those companies whatsoever. (After all, the government is supposed to represent the will of the people...)
If society as a whole isn't able to create new jobs, what you've done is move people from low-productivity jobs to unemployment. And that's not good for growth. That's not what's supposed to happen.Posted by unstablehuman at January 9, 2004 08:53 AM