June 18, 2013
WHY DO WE STILL HAVE SO MANY JOBS?:
Why Aren't We Creating Enough New Jobs? (Megan McArdle Jun 18, 2013, Daily Beast)
As the chart accidentally demonstrates, the employment participation rate remains artificially high, because of the social promotion of women and minorities into the workforce. We have a good ways to go before we reach natural historical levels and it's hard to see how the rate could stay that high given technology and trade.For starters, there's just the empirical fact that labor force participation has been declining since the turn of the millenium. After rising through the 1970s and 1980s as women joined the workforce, labor force participation rates largely leveled off in the 1990s. Then, over the last decade, they began falling.Some of that can be explained by the aging of the population, and women deciding that they don't actually want to work the same hours as men. But not that much of it. The Baby Boomers only began retiring a few years ago; most of them are still working age. Moreover, much of what appears to be a separate trend (women pulling back from the labor force, older workers retiring) may actually be a response to a weak labor market. If you can't get a very good job, you may decide it makes more sense for you to stay home with kids, or take early retirement.So if it's not population aging, why do I think this is happening?Competition from technology and trade. (Immigration may contribute, but the evidence for this isn't that strong, and at best, it's a very small contribution.) Global shipping and trade liberalization has made it more practical to manufacture in low wage countries. Meanwhile, in high wage countries, technology is substituting for labor.
Posted by Orrin Judd at June 18, 2013 3:40 PM
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