Jobs numbers are up. Wages are not. It’s time for some serious thinking about how our economy is working. We’ll do it.
Best jobs numbers since 1999 out last week. Official unemployment down to 5.6 percent. But wages? Going nowhere. “Paltry,” said The Wall Street Journal. And the jobs? How good can they be when average hourly earnings – weak for a long time now – actually fell by a nickel. While headline writers wait for the economy to roar again, a lot of thinkers are wondering if the US economic engine needs to be fundamentally retooled. Rebuilt. Reimagined. This hour On Point: No holds barred. How do we make the American economy work for all of America?
— Tom Ashbrook
David Kotz, professor of economics at the University of Massachusetts-Amherst and Shanghai University of Finance and Economics. Author of the new book, “The Rise And Fall of Neoliberal Capitalism,” among many others.
Erik Brynjolfsson, professor of management at the Massachusetts Institute of Technology’s Sloan School of Business. Co-author, with Andrew McAfee, of the books “The Second Machine Age” and “Race Against the Machine.” Co-author with Adam Saunders of “Wired For Innovation.” (@erikbryn)
From Tom’s Reading List
The Wall Street Journal: Hiring Booms, but Soft Wages Linger — ” A reversal in wages—after hints of a pickup in the prior month—highlighted the labor market’s struggle to gain sufficient vigor to sustain stronger economic growth. Economists typically expect a rapidly falling unemployment rate—to 5.6% in December from 6.7% a year earlier—to deplete the pool of existing workers and spur competition among employers, reflected in higher wages.”
Washington Post: ‘The Second Machine Age,’ by Erik Brynjolfsson and Andrew McAfee — “Brynjolfsson’s and McAfee’s optimism springs from the idea of exponential growth — in the computing power of machines, in the amount of digital information that is being created and in the number of relatively cheap devices that are continually talking to each other. When these numbers doubled every year or two in the early days of the computer revolution, the results, while impressive, were still within our ability to imagine. But now that the numbers are so staggeringly large, the authors argue that machines can finally do things once considered possible only in the realm of science fiction.”
The Economist: The onrushing wave — “Economists take the relationship between innovation and higher living standards for granted in part because they believe history justifies such a view. Industrialisation clearly led to enormous rises in incomes and living standards over the long run. Yet the road to riches was rockier than is often appreciated.”