Friday, June 14, 2019

The Economist’s “Great Jobs Boom” – How Accurate Is That?

Three weeks ago, this venerable publication had quite a cover.  It had a headline “the great jobs boom,” and a cartoon showing dozens of people at work, from a travel hawker and a bus driver to a plant seller and a pizza deliverer.  The two connected articles’ shared thesis was that, despite some noted flaws, these are tremendous times for employment opportunities, that, although “a recession will kill it off… it deserves a little appreciation,” and that, in a positive sense, “the rich world’s jobs market could have more surprises in store.”  The pieces made numerous points, the most important of which I sorted into four categories:  pro-boom, anti-boom, good and underrated, and bad and oversold. 

Supporting the boom interpretation were three main ideas.  By an undisclosed definition, the gig economy, per the articles, only covers about 1% of American jobs.  Many government-released numbers, such as seasonally adjusted and unadjusted unemployment rates, net job growth, and number of people working, are better than they have been since Nixon was president.  Over the past ten years, we have had massively accumulating prosperity progress, and most recent months it has continued. 

On the other side, two points were negative.  Much of the 2010s jobs gains have been from women’s still continuing to join the labor force, which must reach a peak sometime.  Even The Economist admitted here that “middle skilled jobs are becoming harder to find,” contradicting the idea of huge growth almost by itself.  And, outside the articles, the American Job Shortage Number or AJSN still shows latent demand for 15.6 million additional positions, which, though off a third from the Great Recession’s top, seems only a solid improvement.

As well as the positive points above, several other things the unbilled authors mentioned point toward employment gains being more sustainable than we would otherwise think.  The first, “in the ten years to 2016 the cost of filling a vacancy fell by 80% in real terms,” attributed lower hiring costs to the ability of employers as well as potential workers to cheaply use job websites.  Second, what many have perceived as lagging average pay rates have helped.  Third, general progress, which I had thought would level off in 2017 or 2018, has continued, and next year we may well see sub-3.0% unemployment rates with average 200,000 monthly jobs gains.  Fourth, we have thus far had little business deregulation, which will probably change and allow even more positions.  Fifth, numbers found by the authors suggest that, as well as gig engagements, the overall count of low-paying jobs is not as high as what might be called a consensus view, and almost anyone under 80 knows that bad ones, actually in decline with higher low-end wages, are nothing new.  And sixth, the result of the most stunning statistic in the piece, that “in 2018, the employment rate among people of working age was the highest ever in Britain, Canada, Germany, Australia, and 22 other OECD countries,” could someday also, at least potentially, include central North America.

Not all underrated and less-known factors, though, favor our employment situation.  Minimum wage increases, though phased in and generally well-focused, have done hidden damage by cutting the number of jobs created, and scheduled raises are just getting started.  The Phillips curve, which previously showed a relationship between pay and employment, will continue being inoperative, as easily duplicatable products such as software and still-high latent demand for jobs mean productivity and low joblessness are no longer determinants.  The lack of immediate widespread automation danger may be gulling observers into thinking the robots will never come – but, with the next recession, we will know otherwise.  The colorful example contrasting 30%-unemployment Malaga’s clean roads and “buzzing” restaurants with 2.6% San Francisco’s “rough sleepers and empty lots” underscores the gap between front-line rates and how many more people would actually work if given the chance. 

As you can see, we have a mixed bag.  To resolve the problem, let’s go to a definition of “boom,” as provided in this case by Merriam-Webster: “a rapid expansion or increase:  such as… c:  a rapid widespread expansion of economic activity… d:  an upsurge in activity, interest, or popularity.”  We’re close here, but I don’t think this one qualifies, for two reasons.  First, it hasn’t been rapid.  Second, it just isn’t strong enough.  With over 15 million people still on the sidelines and a well-acknowledged shortage of positions suiting most workers’ ability and credentials, 2000s North Dakota it isn’t.  We are in relatively excellent times which as far as we know haven’t peaked yet, but after ten years it isn’t even “widespread,” and it’s hardly difficult to find people, especially among the 1.3 million who have been officially unemployed for over half a year, who know from experience that we don’t have a true boom.  So we can appreciate the help these times have given millions of jobholders, but let’s not get carried away.  Our jobs crisis is not over, and, low unemployment rates notwithstanding, sadly shows no signs of ending.  Eye-catching or not, that is the truth.

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