צ Isn't a Jobless Recovery a Good Thing? The complaints about "a jobless recovery" are a good example of ignorance about economics. They refer to the odd current situation in which measured economic output is rising but measured employment is not. One possibility is that the measurements are wrong--- in particular, that employment is actually higher than measured. But let's suppose it isn't. Why shouldn't we be pleased if output can rise without any more people having to work? What's wrong with higher productivity?

Suppose initially that 90 out of 100 people are working, and producing $50,000 of output each, for a total of $4.5 million in output. The other 10 would like to have similar jobs, if they could find them, but they can't. In addition, there are 100 other people who don't work and don't want to-- they are students, children, housewives, criminals, old people, and those who just plain enjoy leisure more than earning money. Which is a better change:

(a) All 100 people now work, but producing $45,000 each, for a total of $4.5 million in output.

(b) Still only 90 people work (though perhaps a different 90 people), but now they can produce $60,000 each, for a total of $5.4 million in output.

It seems to me that (b) is better. Employment is not an end in itself. We could get full employment by making it a criminal offense to be out of a job for more than a month, but that wouldn't be a good thing.

The more jobless the recovery is, the better.

It remains a puzzle as to why employment is not going up, as it usually does coming out of a slump. But the answer need not be sinister. Maybe people are choosing to retire earlier, or to get more education, or to take better care of their children, or to be pickier about which job they take after becoming unemployed.

[ http://php.indiana.edu/~erasmuse/w/04.01.13b.htm . erasmusen@yahoo.com. ]

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