Tuesday, January 10, 2017

Krugman/Alternet calling Full Employment


I might have to agree with K-man and the stoners on this one in some ways.  We have a lot of people retiring, and are training too many people in fields that are often not highly valued in a production economy.


For those who doubt that assertion about employment, Krugman backs it up thusly: "The low official unemployment rate is just one indicator. What I find more compelling are two facts: Wages are finally rising reasonably fast, showing that workers have bargaining power again, and the rate at which workers are quitting their jobs, an indication of how confident they are of finding new jobs, is back to pre-crisis levels." 
When there is full employment, Krugman continues...


Some evidence of this in UK currently too:






The Fed is mostly exercising its right to remain silent on this topic for now, probably too afraid to say anything lest they become a target of a Trump tweet.




16 comments:

Noah Way said...

Full employment? The numbers can't even keep pace with population growth while ignoring so many (part time, self-employed, underemployed, dropped out, etc.). Shadow stats show real unemployment at 23% while the Dept. of Labor keeps revising it stats, particularly the alarming 'alternate measures'.

Bob said...

Keep talking like this and the labour participation rate will go up, flooding the market, depressing wages, and oops, back to square one.

Matt Franko said...

Could be left wing bias Noah...

Trump closes the border and cuts off imports then a big fiscal push what is going to happen?

Tom Hickey said...

In conventional econ, "full employment" means that there is no output gap and wage pressures is rising.

This doesn't take into consideration the actual number of people that are able to work but not working or not working as much as they would like at the level of their ability.

Conventional econ assumes that they are voluntarily unemployed.

Problem solved.

This can even occur with an output gap, I.e., jobs are advertised but no one is showing up to fill them.

Conventional econ assumes that workers are "flexible" and will go with the jobs are or train themselves for different work as needed.

New Keynesians assume that the labor market is "sticky" so the adjustment is not as immediate and there may be a lag before long run equilibrium at full employment is restored.

PKE and MMT say that is BS. There is no "voluntary unemployment" as assumed and "stickiness" is not from Keynes.

It's the (effective) demand, stupid.

Tom Hickey said...

Trump closes the border and cuts off imports then a big fiscal push what is going to happen?

Either domestic wages approximate Chinese wages, or technology substitutes capital for labor, or US workers are paid high than the global wage and US goods prices rise relatively.

Penguin pop said...

How does it not occur to numskulls like this not to take the labor participation rate into account? People like Krugman are still clinging on obsessively to their IS-L(A)M models and unrealistic assumptions rather recognize that the facts have changed. Like Keynes once said, "When the facts change, I change my mind. What do you do, sir?"

Matthew Franko said...

Well what is the participation rate when we have a production economy and many are not trained in applicable fields?

The rate should be pretty low imo...

You have Trump proposing infrastructure, military tech refresh, and industrial/manufacturing increases... what if you are not trained in any of those areas?

Do you want to participate in any of that?

Probably not....

We have had 8 years of the golden age of Title VII/Title IX and now we are going to transition to a policy that does not utilize any of that training....

doesnt sound too well though out...

Detroit Dan said...

Almost all the US jobs created since 2005 are temporary

Survey research conducted by economists Lawrence Katz of Harvard University and Alan Krueger at Princeton University shows that from 2005 to 2015, the proportion of Americans workers engaged in what they refer to as “alternative work” jumped from 10.7% to 15.8%. Alternative work is characterized by being temporary or unsteady—such as work as an independent contractor or through a temporary help agency.

Detroit Dan said...

Krugman and the Dem establishment lost the election because of mistakes like this.

Matthew Franko said...

Right Dan but that might be "net" jobs...

Lots of people leaving the full time workforce...

Noah Way said...

what is the participation rate when we have a production economy

Last time I checked we had a predominantly service oriented economy.

Matthew Franko said...

Ok, How does training in "Gender Studies" fit in a services economy either?

Bob said...

Training American workers versus more HB1 visas? Not a tough call.

franco said...

Matt, would you say then we are at quantitative full employment, as opposed to qualitative?

Matt Franko said...

Yeah probably good way to put it perhaps... I think we have been training for the last 8 years for other than the Trump economy...

MIC will find people but I'm not too sure about infrastructure and industry...

Matt Franko said...

Then there all the young trained in arts and humanities over the last 8 years that will be lucky to get some trickle down....

Not looking well coordinated...