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What’s happening in the labour market ?

May 27th, 2005

With the Howard government focusing on industrial relations reform, it’s important to be well-informed about what’s going on in the labour market. Last time I posted on this topic, a number of commentators suggested that I had missed some important recent developments. In particular, regular commenter Derrida Derider supplied me with some useful stats that support this, so I need to begin with a revised assessment.

During the 1990s, I argued consistently, and I think correctly, that measured gains in productivity were being driven by increased intensity in the pace of work, longer working hours and a labour market that marginalised those unwilling or unable to put in long and intense hours, notably including older workers.

It now seems clear that most of these trends levelled out in the late 1990s, and went into reverse after 2000

Ross Gittins pointed this out in relation to working hours a couple of years ago and a graph suppled to me by DD shows the same for the employment-population ratio for men aged 55-64 (the trend rate for women was rising steadily, reflecting the first cohort of women for whom the expectation that married women should not work was not a relevant constraint).

Age&Ep

And, as I never tire of pointing out, the period of above-average productivity gains ended around 2000. Since then, gains in multi-factor productivity have been at, or below, the long-term average.

Another area where I relied on casual observation and conventional wisdom is that of contracting. I accepted claims that an increasing proportion of workers were now employed as (often only nominally) independent contractors and that the proportion of wage earners was declining. DD points me to ABS 6291.0.55.001, Table 08, which shows no such trend for the period since 1984 (or any subeperiod) If anything there has been a slight increase in the proportion of employees, matched by a decline in employers and the disappearance of contributing family workers.

My take on all of this is not very original. Slumps shift the balance of power from workers to employers. Other things equal, long expansions shift power the other way. Even in the US, where ordinary workers have been losing ground for decades, the last few years of the boom of the 1990s saw increases in real wages across the board.

But “other things equal” is important. Now that the Howard government can do what it likes in IR, employers will be given the whip hand, and many will be keen to use it, particularly if the housing and commodities booms subside. More on all this from Tim Dunlop, Daily Flute, Alex White and WSACaucus

  1. Dave Ricardo
    May 27th, 2005 at 11:17 | #1

    “It now seems clear that most of these trends levelled out in the late 1990s, and went into reverse after 2000l”

    Maybe so, but 18000 years is a long time for a trend to continue.

    Another interesting little fact is that over the past few years full time employment has been growing faster than faster than part time employment, reversing a decades long trend the other way. This might explain why average hours worked have gone up. It might even explain why productivity growth has stalled, if full time workers are less productive per hour than part time workers. For instance: everybody who works full time works on Friday but nobody does any actual work after lunch on Friday, whereas part time workers only work in the productive days of the week (monday to thursday).

    With the bargaining power issue, maybe the housing and commodities booms will subside and slow the economy; or maybe not. If I was an mployer, the last thing I’d want was a “freer’ labour market when there are labour shortages, which there are right now. It’s a recipe for a massively increased wage bill, IMO.

  2. May 27th, 2005 at 11:47 | #2

    What I do not like is the implication for work/life balance. Employees will be under increased pressure not to take time for family matters as now the employer can sack them for taking too many family days.

    This policy is OK for people when they are fit and well. I think that workers will discover the sting in the tail when their circumstances change and they have a family member with a chronic sickness.

  3. May 27th, 2005 at 11:49 | #3

    I think it’s very clear that the prime motivation for this wave of “reforms” is to reduce the bargaining power that employees would otherwise enjoy at a time of low unemployment and skills shortages. The absence of any cogent and detailed argument that it will contribute to productivity and flexibility is telling.

  4. May 27th, 2005 at 12:08 | #4

    Mark, why does this reduce workers’ bargaining power in the circumstances you describe? The low paid, who don’t *have* much bargaining power, sure. In a recession, your argument makes sense. But I don’t see how the deregulation proposed is going to stop in-demand workers, well, demanding. In fact, the attitude to industrial relations it ensures is only going to encourage them to demand as much as they can get.

  5. May 27th, 2005 at 12:43 | #5

    Yes, Robert, it won’t make too much difference for those with skills (except in industry where the quantum for skills is usually driven by unionisation – the prohibition of pattern bargaining is an attempt to reduce this). However, the salient change for those with easily replaceable skills is the removal of the no-disadvantage test for AWAs. Currently the Award provides a floor under AWAs. Legislating four minimum employment conditions against which AWAs must be tested renders Awards essentially meaningless if employers don’t want to observe them. Any award conditions can just be ommitted from an AWA and the people confronted with this will have very little bargaining power.

    If they don’t like it, well the employer can sack them.

    There’s also usually a depressing effect on wages at the middle and top of the labour market if there’s downward pressure on them at the bottom of the labour market.

  6. sh
    May 27th, 2005 at 13:09 | #6

    the gov talks in terms of producitivity. the opposition talks in terms of more work for less money. these are equal

    if you work the same for less pay or if you work more for the same pay there is an increase in productivity. ie, the government in talking about productivity is talking about doing more for less reward in the context of wage dereg

    yeah yeah technology and so forth also increase output

  7. May 27th, 2005 at 13:14 | #7

    It’s very difficult to quantify how much impact labour market deregulation has on productivity. It is difficult to disentangle (as you note) various factors endogenous to an economy. I’ll quote Peter Dawkins, a labour economist at the Melbourne Institute for Applied Economic and Social Research on the macro questions:

    “It seems likely that the economic reforms since 1983 have been an important contributor to [Australian improvements in labour productivity] and that the changes that have taken place in the labour market have assisted in this regard. It is impossible and probably inappropriate to try to quantify the precise contribution of labour market reforms to this”.

    Dawkins was writing in the Journal of Industrial Relations in 1998, in the context of a comprehensive survey of the literature on deregulation/decentralisation of IR and effects on equity and productivity.

  8. May 27th, 2005 at 13:21 | #8

    if you work the same for less pay or if you work more for the same pay there is an increase in productivity. ie, the government in talking about productivity is talking about doing more for less reward in the context of wage dereg

    think this is exactly wrong. productivity has remained unchanged in either scenario, only the distribution of rewards has been changed.

  9. derrida derider
    May 27th, 2005 at 14:13 | #9

    Yep, I agree that for employers in a booming economy a deregulated labour market is very much a two-edged sword – a point that seems to have escaped employer lobbies. Robert Merkel is quite right that trying to maximise short term gains rather than foster long-term reciprocal loyalties is a game workers as well as employers can play, and its not always clear that an employer should prefer to be in that game rather than the other one.

    On looking at trends in the labour market I think it’s really important to remember that recessions cast a very long shadow. They affect the terms of those long-term implicit contracts for years to come (an infamous editorial in the Times in the 1930s began “A certain level of unemployment is necessary to maintain the proper relation between master and man …”, though the editorial did go on to worry that the level then obtaining was possibly a tad higher than strictly necessary). You cannot easily untangle the effects of these long and variable lags from wider, sustained, social trends; only now are we far enough away from the early 90s recession to start doing so properly (long may we continue to be far away from past recessions!).

    One worrying long run trend is the slow decrease in full time participation rates for *prime age* (25-40) men – something the last OECD study of Australian employment picked up on. Focusing too much on things that were definite problems, but are associated with a particular cohort and are easing (eg older men’s employment) , takes attention away from these.

  10. James Farrell
    May 27th, 2005 at 16:32 | #10

    Four points about this.

    1. I think you mean employment-population ratio rather than employment-participation ratio.

    2. When a variable that had been trending in some direction reaches a plateau, that doesn’t mean that the mechanism driving it has weakened, but more plausibly implies that the adjustment is complete. I think what we see in the case of the participation rates is precisely that, a completed adjustment to new circumstances. And if there is a slight upward trend for the 55-60 year olds, that can be ascribed to a lagged recovery from the early 1990s rexcession.

    3. This general point applies to productivity growth as well. Wouldn’t one expect that the potential gains from increasing work intensity would be exhausted eventually? In that case, why wouldn’t the productivity growth rate fall back to 1980s levels after the casualisation process has reached the limits set by the current institutional framework?

    4. In any case, DD concedes that the participation rate has declined for younger men. This applies not just to 25-40 year olds but, as I mentioned at the time, illustrating with this graph , to 44-55 year old men too. (I posted this just when your blog last crashed, John, so you may not have noticed it.)

  11. jquiggin
    May 27th, 2005 at 17:02 | #11

    James, thanks for the correction.

    I agree with your other points. It’s very difficult to write about trends in productivity and similar variables in a way that is as clear as I’d like. Certainly, in the case of productivity, I’d say that work intensity was pushed to its sustainable limits, and a little beyond, in the 1990s. The end of that process meant the end of rapid productivity growth.

  12. Jim
    May 27th, 2005 at 17:40 | #12

    Rhetoric aside – what precisely is the doomsday scenario we are facing?
    As employees have had the power to do for decades, SME’s will now be able to end the employment relationship without faultlessly following a narrow set of guidelines set out by a government authority.
    Actually that’s not quite true.
    Employees will still be able to end the relationship for any reason at all – regardless of the impact on the employer.
    Employers are still bound by the anti-discrimination regualtions.
    Workers can still choose to join a union – though it’s unclear if those who don’t want to will actually be protected.
    The AIRC will still be able to resolve serious disputes.
    Minimum conditions will be protected by law and a new authority will determine increases to the minimum wage but have to also iconsider the interests of those trying to find work as well as those already working.
    Radical reforms would include giving employers the right to be awarded costs for frivolous, vexatious or malicious claims, compel the AIRC to enforce the law with ALL parties to a dispute and releasing employers from the compulsion to offer all employees (even those who didn’t vote it in) the same terms and conditions for the term of an EBA .
    This is really pretty modest in scope.

  13. May 27th, 2005 at 17:59 | #13

    Well spoken Attila the Jim. Bring back slavery, and make the slaves grateful for it.

  14. May 27th, 2005 at 18:36 | #14

    Option 1 — increased labour market participation in the ’90s leads to productivity growth

    Option 2 — increased productivity growth in the ’90s increases rewards from working and leads to increased labour market participation

  15. Jim
    May 27th, 2005 at 19:56 | #15

    Slavery is not having a choice Chris.
    Slavery is different treatment before the law.

  16. Jill Rush
    May 27th, 2005 at 21:06 | #16

    We are fully engaged in the globalised economy. What this means is that the employers want to be paid like Americans whilst the workers are paid more like the Chinese or Indians.

    The Public Service is there to take the wrap for the bungles created by Government Policy but is expected to lump ever narrowing conditions whilst at the same time being told how important a work and life balance are, especially time with families, whilst having any increase in pay is unfunded.

    Of course having a workforce without rights takes us back to the kind of system that existed in the late 1800s when there was such industrial turmoil and the unions were born in the first place.

    The number of people with the experience to harm others has increased in the detention centres – which have been tried on our own citizens.

    The industrial relations changes will be ok in the good times for those with skills in demand. However it will be women workers who will have the least power and therefore the least pay.They are the ones who should be home looking after the children anyway according to the Prime Minister..

    We move back from being a civilised country as we enter the replay of the industrial landscape of the nineteenth century. It’s been a while since people have had to demand a fair go. What are the odds of Mental Health improving anytime soon?

  17. May 28th, 2005 at 02:20 | #17

    Jim, my objection is an exageration, in proportional response to your suggestion the scope is ‘modest’. Two-thirds of aussie employees are to have long-standing and highly valued rights and entitlements taken from them by executive fiat. Cheers.

  18. S Brid
    May 28th, 2005 at 13:17 | #18

    This is is what passes for economic analysis these days. Read this carefully

    During the 1990s, I argued consistently, and I think correctly, that measured gains in productivity were being driven by increased intensity in the pace of work, longer working hours and a labour market that marginalised those unwilling or unable to put in long and intense hours, notably including older workers.

    The short version of the definition of productivity is the the number of widgets that can be produced in a set periond of time.

    Read another way this statement says:
    workers were being pushed more and more to produce things within a set period of time. In other words, the only things which seems to be missing is the whip. Those of course those who wouldn’t stand for thing type of working environment were unable to find work.

    Therefore, one could easily assume from such a statement that, workers are treated more harshly than they ever were to produce more and those who refused were left on the unemployement line.

    Seriously, this must go down as probably the stupidest statement I have read in a long time. It’s worse than what Marx would have written if he was around these days.

    No mention is made of the capital to labor ratio that improved markedly during this time. A quick look at capital expenditure stats for this period would easily prove this.

    Productivity gains can only be made when captital is spent on labor saving devices: in a factory environment this means faster, more modern machines like robots assisting workers produce more. In the services area this would mean more computing power devoted to each worker.

    How anyone writes this drivel and teaches kids in his spare time in bewteen running a blog is beyond me. The writer of this statement does not even understand the definition of productivity: a year 12 concept!

    If work intensity and workers rights are discussed, I don’t tenure being in Howard’s line of sight unfortunately.

    Lastly, like anything in economics trends dont happen in a linear fashion. The fact that productivity may have slowed for a few years means very little other than just that.

  19. jquiggin
    May 28th, 2005 at 17:04 | #19

    Steve B, thanks for trying to set me straight on the definition of productivity.

    You might want to reread the post, check on the definition of multifactor productivity, read this paper and reconsider your comments.

  20. derrida derider
    May 28th, 2005 at 18:18 | #20

    John Humphreys makes an important point – productivity affects participation. But we can’t say a priori whether the income effect dominates the substitution effect. In the 70s people were worried what everyone would do with their leisure – they expected people to become so productive they wouldn’t bother to work more than a few hours – while John seems to think that the prospect of more earnings will make people want to work longer. The history of working hours and participation since the 70s suggests he might be right (more of the working age population is now working than ever before in our history).

    But participation affects productivity too – the more low-productivity workers have jobs, the lower average labour productivity will be (that’s why French labour productivity is higher than in the US – the French keep their marginal workers out of a job).

    James, amongst groups that have a lot of people with potential marginal attachment to the labour force (ie they have choices such as early retirement) the EP ratio is a much more reliable indicator of what’s happening than the PR. And EP ratios amongst 55+ men (and women) have risen 11 percentage points since 1993 – 8 ppts points of which is a reduction in measured unemployment (the residual 3 ppt is the recovery in the PR).

  21. May 28th, 2005 at 22:30 | #21

    John Quiggin’s reasoning appears to be that workers were worked harder and longer in the 1990s, hence there were measured productivity gains. I don’t know how to measure work intensity, and will leave that up to the experts. Nevertheless, average working hours actually declined between 1992 and 2002:

    http://www.ausstats.abs.gov.au/ausstats/free.nsf/Lookup/B2AEBC6BB2340DD6CA256D330008D25E/$File/61040%5F2003.pdf

    Average weekly hours worked by employed persons fell from 34.7 to 33.7 hrs/wk. Average “full-time hours” worked was constant at 40.8 hours per week, while average “part-time hours” worked rose from 15 to 15.9 hours. Average weekly earnings for full-time adults rose from $621/wk to $931.50/wk.

    Perhaps work intensity (however measured) explains higher labour productivity, because I can’t see the evidence for longer hours.

    Another interesting change over time has been the fall in real-unit labour costs. I’d like to hear John’s theory for the decline in compensation to labour relative to other factors of production. There is a discussion on this theme over here:

    http://www.gravett.org/steve/?p=499

  22. James Farrell
    May 29th, 2005 at 11:22 | #22

    DD

    I didn’t notice you’d replied to my post chez Baboon. Thanks.

    As you say, the line between unemployment and non-participation is both blurred and volatile for older workers, who can’t decide whether they’re actively seeking work or not. This is important because it means the unemployment rate itself is not a good guide to either (a) labour market tightness and the likelihood of wage inflation, or (b) how bad things are for these workers.

    But how is this relevant to the matter at hand?

    John said a declining participation rate was evidence that the labour market no longer meets the needs of older male workers. Since then, we’ve all agreed that it hasn’t declined since the late eighties, but I maintain that at best it hasn’t improved after declining sharply in the seventies and early eighties. But you go further and claim that the labour market is in fact serving older workers pretty well, on the basis of a growing employment rate, which you say gives a more meaningful picture.

    Of course, if the employment rate is rising faster than the participation rate, this implies that unemployment is falling. And this is good, but it’s a cyclical effect, and none of us is talking about that. When we adjust for the cyclical effects, say by comparing 2005 with 1990, and we still find that employment has increased more than participation, what does it mean? Presumably that there has been some fall in structural unemployment.

    As I read all these figures for the male 55+ group, taken together they say that, relative to the late 1980s, part-time employment has risen a little and unemployment has fallen a little, with full-time employment and inactivity about constant. So some older people who might have been unemployed even in the 1980s boom are now in part time work. I guess that’s good, but it’s not great, and we still have the problem with the younger cohorts.

    Finally, I think John Humphreys’ claim is both implausible and untestable.

  23. Tony Healy
    May 29th, 2005 at 15:25 | #23

    John, I will just make a quick comment about ABS stats and contracting. The data set you mention, ABS 6291.0.55.001, Table 08 does not contain enough information to make determinations as to the prevalence of “contracting.”

    I will make two assumptions here. First, you refer to the fact that so-called independent contracting arrangements are often not genuine, so I presume you are using the term contracting to refer to non-standard employment arrangements? In any case, that is the usual use of the term in this sort of discussion.

    Second, I presume that in your interpretation of ABS 6291.0 you used the category of own-account worker as a proxy for contractor?

    The problem here is that own-account worker is not in fact a valid proxy for either true independent contractors or for non-standard employees in general. There are two reasons for this. One is that workers in these arrangements often don’t understand who their employer actually is.

    The second is that it is now common practice for labour hire placements to be structured as one dummy company providing the workers to the labour hire firm for on-placement to the true employer. In these arrangements, the dummy company is the nominal employer of the worker and, for all intents and purposes, the worker is recorded as an employee of that dummy company. Labour hire practice adopted this tactic as a defence against court cases that found labour hire firms or the end employer were the actual employers of workers.

    Contracting as discussed here is intimately tied in with casualisation, and the definitive work on this topic in Australia is Watson and Buchanan’s Fragmented Futures. A more appropriate way to detect non-standard employment arrangements is to consider whether leave is included. Under that criteria, Buchanan and others find that casual/contract employment increased from 16 percent in 1985 to 27 percent in 2002. (Watson p69)

    This is generally supported by other data. For example, recruiters enjoyed a 31 percent increase in revenue from 1999 to 2002, and a 37 percent increase in placement numbers. (ABS 8558.0)

  24. Tony Healy
    May 29th, 2005 at 15:34 | #24

    While I’m here, I’ll mention what I think the real impact of the IR reforms will be.

    First, by raising the exclusion criteria to 100 employees, the reforms effectively apply to all corporations in Australia, even the huge ones. This is because 100 is large enough to conveniently siphon off workers onto placement contracts. That is, the banks, Qantas and anyone else can start shifting non-core workers into numerous dummy companies that then provide labour to the original employer, as per the increasingly prevalent labour hire arrangements.

    Second, forthcoming FTA’s with China and certainly India will almost certainly contain GATS Mode 4 type provisions for movement of natural persons. The effect of those provisions will be to saturate Australian employment markets and drive down wages and other conditions. We are in fact taking a step towards third world inequalities.

  25. May 29th, 2005 at 21:24 | #25

    SH’s comment at 7 is inaccurate. While working longer for less is indeed an increase of productivity, you can also get productivity increases when both go up – or when both go down. It’s just that the ratio needs to change.

    Firm’s productivity affects their incentives, and other costs of drops in short term production get externalised. As well as which, as, when and if things do trickle down into more employment, it’s not the same people who are the gainers (even the Victorians saw this – read Disraeli’s “Sybil”). Also, further waves of “improvement” can make a sort of shock wave effect, overwhelming trickle down.

    All of which leads to some of the material I touched on my publications page, not just the Kim Swales stuff, so I’ll leave it there due to lack of public interest.

  26. S Brid
    May 30th, 2005 at 00:14 | #26

    John:
    I don’t understand why you are critical of my comments.
    Unless I am mistaken, you are saying that productivity increased during the period in question because workers were made to work harder: work intensity, is the term used.
    There is really nothing new in this theory as it goes back (if I recall my economic history correctly) about 200 years ago when there was vigorus debate on the marginal utility of labor. Those who believed (I think started by Ricardo) that profit was derived through the exploitation labor were widely discredited. This argument proved to be fallacious. Unfortunately we continue to see this argument rise from the ground like a dead body. Labor cannot improve productivity without capital. If this wasn’t the case money would be pouring into places like Tanzania where labor is plentiful and I am sure if an employer used a whip it would easily be overlooked.

    Next:
    Howard’s labor deregulation.

    If you want to observe what regulated labor market looks like let’s debate what unemployment rate looks like in France and Germany. During 2004 world growth was 5.5%: probably one of the highest rates seen for decades. German unemployment actually rose during this period. France didn’t quite (but almost) achieve this stupendous result. Unemployment there just hung around 10.5%. It would be wrong to argue that the appreciation of the Euro had much to do with Germany’s plight because unlike France or Italy, Germany’s trade is mostly inside the EU. The ONE and ONLY reason why unemployment is so high is because of the constipated labor market in these countries. If employers can’t fire they won’t hire. Daimler Benz and BMW have not built a new plant in Germany for 15 years and I bet they won’t, until labor laws are changed.

    (I am bringing this up because I saw a few posts criticizing Howard for making these proposed changes).

    It is insane to decry these proposals if you really are on the side of the workingman. What we want are not laws governing hiring. We need labor markets, which price labor to its highest rate possible and the only way we can achieve this is by having plentiful jobs. Those wanting restrictive labor laws to remain are really demonstrating selfishness cloaked up as altruism.

  27. May 30th, 2005 at 02:13 | #27

    Give it up S brid,

    In your first point you are implictly equating productivity with profitabilty, Wrong, unless you are representing a class instead of a technical point.

    And your second point is crap. First, unemployment in the US is a serious issue. Yes, another jobless recovery. And if you’re going to quote Germany, how can you possibly exclude communist China? 10 per cent average annual growth, and stick your Washington Consensus up your arse, thank you very much and how’s your father.

  28. Fyodor
    May 30th, 2005 at 07:46 | #28

    CS,

    There’s very little communism at work in China’s GDP growth rate – quite the reverse. And unemployment is much worse in Germany than it is in the USA.

  29. James Farrell
    May 30th, 2005 at 10:29 | #29

    S. Brid

    Either you didn’t bother to read the paper on productivity that John linked to, or you are out of your depth. In the unlikely event that you are capable of grasping the point, let me put it in twenty-five words: when they talk about productivity, unless otherwise specified, economists don’t mean output per man-hour, but rather multi-factor productivity, which is adjusted for capital intensity too.

  30. S Brid
    May 30th, 2005 at 10:37 | #30

    CS
    Hope I my post didn’t offend you in any way as you seemed quite angry. I will try to help you understand where you are wrong as best I can.

    1. Wasn’t equating productivity to profits in any way? I was talking about why I thought John’s comments on work “intensity� were wrong. Please look at the earlier post to see my comments on productivity.
    2. I really don’t understand what you are saying when you are talking about “classâ€? etc. Did you forget to add anything to that, it’s incomprehensible?
    3. I agree with you about the point of unemployment being a serious issue in the US. At 5.2% it is serious. The only comments I would make to that is that the US has created over 20 million new job in the last 20 years. Germany, nil. The US has further to go to get unemployment down, only Germany is over double that now and direction still points north. I would also make a comment about the resilience of the US economy. Imagine taking a hit like 911, going to war, the tech crash and the place continues to grow at a good clip. Please, I am not making any comments about US foreign policy etc. I am just making an observation on its economic performance. That’s all.
    4. Yes of course China is growing at 10%. Funny how liberalizing capitalist based economic reforms have that effect isn’t it. I am glad you brought that up. The parts of the Chinese economy, which are growing massively, are those where there is almost no interference or very restrictive labor laws.
    5. I don’t know why you brought up the “Washington “consensus� charge. Would you kind explaining this as it looks like you left something out.
    6. I would have thought that referring to my rectum and father in the same sentence would qualify as rough language.

    Thanks

  31. James Farrell
    May 30th, 2005 at 10:43 | #31

    By the way, Steve Edwards, no one is claiming that longer hours increases productivity. Unless they are unrecorded hours (and unpaid?), which I think is a possibility worth investigating.

    And it’s nice to hear from Tony again.

  32. S Brid
    May 30th, 2005 at 11:56 | #32

    Hi James:

    unless otherwise specified, economists don’t mean output per man-hour, but rather multi-factor productivity, which is adjusted for capital intensity too.

    Just did a quick google for the exact defintion of productivity. Typed in “defintion of productivity”. see link http://www.google.com.au/search?hl=en&lr=&oi=defmore&q=define:Productivity

    All expose the definition as being the “amount of output per unit of Labor”.
    I described it as “the number of widgets produced in set period of time”.
    More or less the same thing.
    Also checked a dusty Samuelson. Pretty much the same thing.
    Please let me know if this is wrong as I would like to correct myself if that is the case.

    thanks

  33. Tony Healy
    May 30th, 2005 at 12:13 | #33

    S Brid, many aspects of the US situation are troubling. For example, the huge, profitable, expanding retailer Wal-Mart reportedly pays its staff so little that they depend on social security payments. In effect, the US taxpayer is subsidising the shareholders and corporate management of Wal-Mart.

    Wal Marts cost state, SF Chronicle, 03 Aug 2004

    More cases of workers dependent on social security

  34. May 30th, 2005 at 12:27 | #34

    But James, John Quiggin appears to be saying just that:

    “During the 1990s, I argued consistently, and I think correctly, that measured gains in productivity were being driven by increased intensity in the pace of work, longer working hours and a labour market that marginalised those unwilling or unable to put in long and intense hours, notably including older workers. ”

  35. James Farrell
    May 30th, 2005 at 12:57 | #35

    So he did, Steve. I should have checked. Presumably he means the extra hours are unofficial and unrecorded, as I suggested. Alternatively, he meant that the extra hours are more productive at the margin, and of course this would be a problem only if the employees were bullied into putting in the extra hours (which I suspect is often the case, but that would need be proved). Let’s see if a clarification is forthcoming.

  36. jquiggin
    May 30th, 2005 at 15:14 | #36

    I made the point about unrecorded hours, including such things as the loss of breaks, in a number of papers during the 1990s.

  37. May 30th, 2005 at 16:04 | #37

    All that, plus the obvious fact that if I work an extra hour, my per-capita productivity has risen.

  38. James Farrell
    May 30th, 2005 at 16:24 | #38

    Only in the layman’s sense: ‘I’ve been very productive today.’

  39. May 30th, 2005 at 16:57 | #39

    Apologies for rough language S Brid. Will rejoin the rest at some stage, particularly re China.

  40. May 30th, 2005 at 17:21 | #40

    James: Finally, I think John Humphreys’ claim is both implausible and untestable.

    I didn’t make any claim. I think James just enjoys dissagreeing with me — even when I’m not saying anything. :)

  41. James Farrell
    May 30th, 2005 at 20:37 | #41

    I’m only human, John (H).

  42. derrida derider
    June 1st, 2005 at 09:16 | #42

    No, Steve Edwards, if you work an extra hour your production has risen. your productivity (ie output *per hour* worked) has probably fallen a little (production is generally subject to diminishing marginal returns).

    There is genuine confusion here about labour productivity versus multi-factor productivity. Lots of economists (esp labour economists) do use the term “productivity” as shorthand for “labour productivity” – the partial differential. Others (esp macroeconomists) use it as shorthand for MFP – the total differential. JQ in his scribblings is in the latter camp. And S Brid has not yet grasped the difference, probably because of this inconsistent shorthand usage.

  43. June 1st, 2005 at 15:39 | #43

    DD, precisely because multifactor productivity is a bundle, it is a vector, not a total. And when you think, well, that was just verbal shorthand, isn’t that precisely what the others were using? It’s not good enough for precision work, of course, but it is adequate for this sort of general illustration.

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