NO ONE WILL MISS JOBS:

The pick-up in productivity appears due in part to the pandemic itself, as it often takes big changes in the way businesses are organized and operate to take full advantage of the technology and investments they have made. They are reticent to do this when things are going well. Businesses apply the "if it ain't broke, don't fix it" philosophy. The pandemic gave many businesses no choice but to make big changes, and it shows in the higher productivity. But the pick-up in productivity growth seems more persistent, as businesses have substantially upped their investment in labor saving technologies. [...]

The issue of the economy increasing its productive capacity with fewer workers -- Corporate America is reporting strong earnings -- was also the subject of a recent podcast chat I had with AEI economist Michael Strain (who also supplied the above job-market numbers):

One of the interesting economic realities right now is the ability of the economy to produce goods and services without all these workers. The level of economic output, GDP, is back to where it would've been if there was never a pandemic. Businesses are able to produce goods and services as if there never was a pandemic, even though we're six or seven million workers in the hole. And my concern is that businesses will have figured out how to get by with fewer workers.

And if there are workers who are lingering on the sidelines -- because their unemployment benefits were generous, or because their kid's school can't stay open, or because they have so much money in the bank from all the stimulus checks -- those workers may be lingering. And by the time they're ready to come back, labor demand might have cooled off and businesses might say, "Hey, we just need fewer workers than we used to need." And the jobs that they're counting on returning to may not be there for all of them.

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