One of our conservative commenters, whom I nicknamed “Dang” back when I thought he/she might be the same person as our friend Thucky (I was wrong), made what I thought was a particularly apt comment to a recent BlueMeanie post on the May jobs report.
The Meanie reported accurately about the job creation in May (280,000), which was impressive, and the consistency of the jobs recovery, also impressive, if you focus on the number of jobs. The Meanie pointed to a possible weakness in productivity growth, a point to which I’ll return below, and other factors in trying to reconcile the robust job growth with the less than stellar economic growth.
Dang had what on the surface would be an entirely different way of reconciling the job growth with overall economic strength. Here’s Dang’s comment:
No administration’s policies have created more twenty hour per week jobs than the current one.
I don’t agree with Dang’s attribution to this administration’s policies, but put that aside. The comment otherwise is spot-on. A lot of the newly created jobs have been what we insist on describing as “part-time” jobs.
And that’s where I think the Meanie’s chest-thumping about Obama’s job creation and Dang’s harrumphing about supposedly shortened work weeks can be reconciled.
If you’re still interested, follow me after the jump.
Back to productivity growth. Productivity growth is bumpy, so very recent productivity growth may have been slow. But long-term productivity growth is remarkably consistent. I just wrote a piece, Productivity: Where Marx Nailed it on Capitalism, focusing on evidence that productivity growth is alive and well.
Productivity growth is a really good thing, if the associated gains are shared. For three decades, ending about 35 years ago, our nation (well, really, the entire Western world) did exceptionally well on that front overall (with one ugly exception: the systematic exclusion of black Americans from the party for most of that period). Yes, we added jobs, lots of them, and wages increased enormously, but total work hours didn’t grow at nearly the same rate as jobs or wages. So we allowed the work week to decline, which allowed us to maintain full employment.
Then things changed. Productivity continued to increase, but the gains no longer went to wage growth, which caused the historical trend of a shorter and shorter work week to stall. Where did the productivity gains go? Almost exclusively to those at the top. Thus, the share of our overall wealth held by the Forbes 400, for example, tripled over the last three decades. Like that group really needed it.
But productivity growth does gobble up work hours. That’s what it’s designed to do. If we don’t offset it by continuing to shorten the work week, increased productivity ultimately puts pressure on total employment. But if we shorten the work week without increasing wages, the quality of life for America’s workers suffers badly. This is not always easy to see, because there will be periods of intense job creation, like during Clinton’s presidency, that buck the long-term trend.
The bottom line is that the way to maintain balance is to allow the work week to shorten (actually, force it to happen by lowering the threshold for overtime pay), but to direct to increased wages a portion of the productivity gains large enough to offset the shortened work week.
The direction in which productivity gains flow is and always has been the result of policy choices. And policy choices since 1980 have caused productivity gains that should have made life better and better for all of us to be diverted almost exclusively to a small group at the top, causing the rest of us to suffer.
So, all those “part-time” jobs that Dang belittles would be considered good jobs, if we had allowed wage growth to keep pace with productivity growth.
When you look at it through that lens, the bottom line here is that BlueMeanie and Dang should be on the same page. Think that will happen?