The question of full employment and music from room 608

May 25th, 2018 at 8:26 am

Over at WaPo, I revisit the argument that a) since economists can’t tell if we’re truly at full capacity in the job market, b) there’s not much in the way and price and wage pressures, and c) the prime-age employment rate is not apparently topping out, we should assume there’s still economic room-to-run.

I’m on the road and in room 608, which is why I can’t get this old, uptempo jam by Horace Silver out of my head. If you let it run on YouTube, next thing you know, you’ll be hanging out with Sister Sadie, who is, ftr, great company.

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4 comments in reply to "The question of full employment and music from room 608"

  1. Bill Anderson says:

    Jared, there hasn’t been much in the way of price pressure since the 80’s. That simply isn’t a good indicator, especially with the way inflation is calculated and distributed(in the old methods, CPI in April would have been 3.2% yry which was its “full capacity run up level until the late 60’s). “Full capacity” is a dialectical term. Nor does this expansion have room to run. Corporate bonds are imploding and will lead to less capital spending, the lowest since the 2010 in 2019. The consumer bubble is not as large this expansion as the last 2 but when coupled with the corporate bond bust, means the current cycle is currently cresting. This is 9 trillion dollars worth of debt that has been inflating that will have to reduce. Granted, compared to 2007-8, this is a drop in the park compared to GDP size of the overall economy. But it will raise unemployment up for a couple of years.

    prime age employment will be growing for another 15 years. business cycle unrelated.


  2. james a ward says:

    Sounds like you’re “The Preacher.”


  3. Kevin Rica says:

    Jared,

    That WaPo piece is one of your best in a while.

    There was another good piece in WaPo yesterday: https://www.washingtonpost.com/news/wonk/wp/2018/05/25/the-alarming-statistics-that-show-the-u-s-economy-isnt-as-good-as-it-seems/?utm_term=.1c74c9ee98d1

    I’ve no idea what Krugman is thinking. He’s gone full-out Panglossian on us.

    Obviously, many people may have jobs, but could hold, better, higher-paying, more productive jobs.

    Those who worry about full employment are concerned about the redistributional effects: wages would rise. Without more immigrants, employers couldn’t fill low-wage jobs at low wages any more.


  4. Kevin Rica says:

    Jared,

    The WaPo piece on full employment is one of your best. Your recent piece on the dollar makes this a hot streak.

    What is Krugman thinking? He has gone full-out Panglossian on us!

    The was another great piece in Wapo yesterday, https://www.washingtonpost.com/news/wonk/wp/2018/05/25/the-alarming-statistics-that-show-the-u-s-economy-isnt-as-good-as-it-seems/?utm_term=.1c74c9ee98d1.

    There are obviously large numbers of people in this country with college educations (or no education) working at Starbucks or other places when they could be more productive. Maybe some have dodgy degrees, but they are still grossly underemployed. They could do higher-wage, higher productivity jobs if they had the opportunity. THAT would be full employment.

    So why are people saying that we are at full employment? Maybe they are worried about the redistributional effects. At true full employment, wages would rise to move workers out of lower-wage, lower-productivity jobs (therefore raising output). But that would raise wages for all workers and the market would redistribute income down. Without higher rates of immigration, there would be no low-wage workers. The existing workers would almost uniformly get higher wages.

    I know that there are some people who only like free markets when it redistributes income up but HATE the free market when it redistributes income to others.

    But what is Krugman thinking?


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