Today's New York Times has two opinion pieces on the labor market. Pessimist Steve Roach does not believe that the productivity growth that we are seeing is real or lasting.
we are woefully underestimating the time actually spent on the job. It follows, therefore, that we are equally guilty of overestimating white-collar productivity. Productivity is not about working longer. It's about getting more value from each unit of work time. The official productivity numbers are, in effect, mistaking work time for leisure time.
This is not a sustainable outcome — for the American worker or the American economy. To the extent productivity miracles are driven more by perspiration than by inspiration, there are limits to gains in efficiency based on sheer physical effort.
Of course, if Roach is correct, then further increases in demand ought to result in more hiring, because current workers are stretched to the limit.
Meanwhile, Austan Goolsbee believes that the labor market is weaker than it looks.
From 1999 to 2003, applications for disability payments rose more than 50 percent and the number of people enrolled has grown by one million. Therefore, if you correctly accounted for all of these people, the peak unemployment rate in this recession would have probably pushed 8 percent.
Goolsbee argues that since the late 1980's, it has been easy for people to transition out of work and into disability rather than unemployment.
For Discussion. Goolsbee implies that with an increase in demand, many who have taken disability would be back in the labor force. Is this plausible?