Whenever a new batch of “employment/jobs” data gets released — which happened at the end of last week in the U.S. — I always get kind of frustrated, because (a) no one really understands the unemployment rate and (b) it really doesn’t matter so much if the country is adding jobs if earnings are horrifically stagnant.
To that last point, here’s an article from Tyler Cowen, an economics professor at George Mason. Here’s the section of the article that might make you reach for some Xanax:
The consequences have been startling. Data from the Economic Report of the President suggests that if productivity growth had maintained its pre-1973 pace, the median or typical household would now earn about $30,000 more today. Those higher earnings would constitute a form of upward mobility. For purposes of comparison, if income inequality had maintained its pre-1973 trend, the gain for the median household would be about $9,000 in income this year, a much smaller figure.
Part of the issue here, then, is that we often frame this around inequality, when in fact the true issue revolves around productivity. Phrased another way:
Those changes in productivity and inequality trends aren’t entirely separate, but accelerating the growth of productivity has the potential to do more for upward economic mobility…
