The Impending Octogenarian Cage Match That Portends Ruin
The March headline figures say 562,000 jobs were “created” during the last two months. Actually, the more comprehensive index of aggregate hours worked implies otherwise; it shows that labor utilization in the US economy has declined by -0.3% since January.
Of course, in the great scheme of things the February-March 2023 index numbers are rounding errors, but when this index is viewed in longer term historical context the message is clear as a bell. To wit, labor utilization growth has slowed sharply, even as the cyclical fluctuations have become more violent.
Thus, since December 2000 labor hours utilized in the private sector have grown at just 0.7% per annum compared to a 2.0% rate between 1964 and 2000. In a word, the labor hours growth rate has down-shifted by almost two-thirds, yet “hours” are one of the two building blocks of overall economic growth
Index Of Aggregate Private Labor Hours, 1964 to 2023
The other source of economic growth, of course, is productivity, but that hasn’t ridden to the rescue, either. Between 1964-2000, average annual productivity growth weighed in at 2.0%—a figure which has slid to 1.7% per annum since then, and to just 1.06% per annum during the last decade.
In the realm of macroeconomics, hours + productivity is all there is, there ain’t no more. So with both growth factors slipping badly, annual gains in American living standards have hit the skids.
The best measure of that is real median family income. Between 1954 and 2000, in fact, that figure soared from $36,000 to $80,050, thereby gaining 1.7% per annum for nearly a half-century running.
Real family income since 2000 has essentially plateaued, however, increasing by just 0.48% per annum. That is, real family incomes have been growing during the last two decades at just 28% of their historic rates. And that’s punk no matter how you slice it.
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