Jobless recoveries is an all-too-frequent phrase in our modern economy.  The 3.5% growth in 3rd quarter GDP is a bit misleading as the government poured money into the economy (cash for clunkers, first-time home buyer program, etc.).  The hiring trend continues to be abysmal as somewhat expected as it is a lagging indicator.

But is it becoming more of a lagging indicator?  This article from Commentary Magazine makes an observation I haven’t heard elsewhere (emphasis mine):

The underlying reason for increasingly jobless recoveries in recent decades can be found in Chart 5 of the New York Fed’s report. In the early 1980s, 51 percent of industries were undergoing structural change as opposed to merely cyclical change. By the 1990s, that percentage was 57. In 2003, it was fully 79 percent. It is undoubtedly even more now, six years later. The fact of the matter is that the microprocessor is remaking the economy from top to bottom—just as the steam engine did two centuries earlier—but it is doing so much faster. One result of this profound economic revolution is that productivity—the amount of output per unit of input—is rising quickly, and the largest input in most industries is labor. Thus the need to hire new workers as the economy begins to grow again is less and less urgent. It increasingly makes a lot more business sense to invest in new, highly productive equipment instead.

The author makes a good point regarding ever increasing productivity requirements.  My impromptu analysis of my business circle supports these requirements.  Many people talk of doing 2 –3 different jobs for their company…and the company expects this effort.  Clearly the present job market supports companies requiring this of their employees – jobs are scarce.

The ability to leverage technology to greatly increase productivity is an ominous development in the effort to recover from this deep recession.

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