This morning, we will find out whether the recovery remains jobless. Meanwhile, I have an essay, Labor is Capital, that offers an explanation for jobless recoveries.
Much of today's American workforce is engaged in roundabout production, which Böhm-Bawerk equated with capital. There is no longer a meaningful distinction between labor and capital. Labor is capital.
If labor is capital, then we have lost the automatic tight connection between spending and employment. Firms can vary their output with little or no variation in employment. This explains how we can have a "jobless recovery," meaning a large percentage increase in output without a comparable percentage increase in employment. For firms in today's economy, labor represents an investment. Firms hire workers in order to develop capabilities that will eventually produce output more efficiently. The return on an investment in workers may take as long or longer to realize as the return on investment in a machine. The return on investing in workers may be at least as uncertain as the return on investing in equipment.
Read the whole essay. It really spells out differences between the Austrian-style Recalculation story and the Keynesian spending story.
[UPDATE: Last month's increase in private-sector employment was only 71,000. The recovery remains pretty jobless. As I remember it, key Administration officials get a "sneak peek" at these figures several hours before they are released. However, my guess is that the timing of Christy Romer's resignation as CEA chair is just coincidental.]