Man Without Qualities

Thursday, August 07, 2003

Steve Antler Is Justifiably Smug ...

... about the productivity numbers released today. Productivity grew at an annual rate of 5.7 percent in the April to June quarter.

It is also worth bearing in mind some rather obvious but often overlooked employer thinking:

When a jittery producer faces a recovering market for the producer's product, the employer at first resists hiring new people out of concern for renewed recession. That tends to push per-employee productivity up for a while even on an hourly basis (that is, employees work more during a given hour, they don't just work more hours), which is consistent with the numbers just reported. Other factors, such as new technology, can also lift productivity, of course - and those factors are more lasting.

The next thing that happens is that employers hire more temporary employees. And, indeed, there has been a lot of temporary hiring. Obviously, in a real recovery, this "next thing" (as well as the "final" thing described below) is going on simultaneoulsy with the first thing with regard to different employers and even within the same employer.

Finally, temporary employees become scarce or less acceptable and employers become more confident, so permanent employee hiring begins in earnest and jobless claims drop.

The country appears to be arriving at that point now. Which is consistent with Steve seeing the "Big Dubya" in the employment future. The retail surge doesn't hurt any, either.

Gee, it will be interesting to see how Paul Krugman explains how all this positive news is meaningless. There is, of course, the fall in the bond market. Maybe he can just write about that again, not mention the rest at all or only in some slighting aside, and toss in some conspiracy accusations against the President, the Vice President or even Alan Greenspan. And there's always his neo-luddite mode: Increasing productivity means fewer jobs as people are squeezed out by technology! Or how about an old stand-by like: Nobody has been paying attention to fuel prices, which are soaring as supplies contract! Hey, don't laugh - it's filled columns for him (if not exactly "worked") before.

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