Jun 03, 2012 at 5:35 pm
That’s the good question that led off an interview I did today with Alex Witt on MSNBC.
My answer is largely the same as it’s been, and much what you’d expect from those of us who’ve long focused on the demand side of the equation:
–the job market is still suffering from weak labor demand, which is itself derived from still-relatively-weak demand for the goods and services our firms produce;
–we’ve never really hit the virtuous cycle where growth begets jobs, begets paychecks, begets rising consumer demand, feeding back into growth, jobs, etc.;
–instead we’ve been stuck in a more vicious cycle where employers have been able to meet what demand there has been with only slight additions to their workforces;
Whenever this discussion of jobs comes up, I strongly recommend starting from the place that a) we’re a 70% consumption economy (71.2%, most recently, in fact) and b) labor demand is derived demand, i.e., derived from consumer/investor demand). If households’ balance sheets are still fragile, if most workers’ real wages and most families’ real incomes aren’t going anywhere (see figure), if home values remain depressed (although they’ve pretty much stopped falling, which is good), if investors are largely sitting it out waiting for the virtuous cycle to get started—don’t expect to see much consistent strength on the jobs front.
Add in state/local layoffs, Europe, slowing China (and depreciated China currency, which hurts our exports), the premature fading of stimulus, and the threat of the fiscal cliff and another kill-me-now debt ceiling debate, and, well…there’s your answer.
For my next act post, I’d like to emphasize the wrong answer to this question of where are the jobs, i.e., they’re out there but begging for skilled workers to fill them. I’ve heard that a lot lately, and while there’s surely something to it in some labor markets, it’s largely unsupported by evidence, especially on the wage side. There’s really just no wage pressure of the type that simply must accompany unmet labor demand…until we see that, I’d recommend pretty deep skepticism on that front.
Like I said, figures on that to come…
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