Crusty Crawford joined our lunch table with a pronouncement. “We’ve always assumed a close tie between output and employment,” he said. No one responded.
“Yes, sir,” he continued, speaking to our blank faces, “used to be folks could count on sort of a direct link between the amount of stuff we made as a nation and the number of jobs it took to make that stuff. More carburetors, more cars, more auto workers. Why, some of the best economic observers would just sit on their porches and count the trucks going by. More trucks, more drivers, a better economy.”
His listeners looked at their meals as Crusty carried forth. “But I’m here to tell you, that tie is getting looser, that link is not as snug as before. Indeed, just consider what’s happened over the past few years.”
Here it came. Crusty had spent the morning playing with some statistics, and we were about to be regaled with the story they told. There was no avoiding it.
Crusty said, “Between 2007 and 2010 our Gross Domestic Product or GDP, the value of all we make and do in this country, fell by just 0.3 percent. Oh, you may look surprised, but I’m right. The recovery had brought us back from the low of the recession to where we were just about even with our pre-recession high.”
As he looked from face to face, Crusty said as an aside, “Did you know there are folks who still talk of the recession as if it was still going on? Well the truth is, not only is the recession over, the recovery itself was ending in 2010. We were, as we are now, in the expansion phase of the business cycle.”
To break the silence, I said, “Is that so?”
“Darn right,” Crusty offered. “But even with the recession over, that is, with output back on the growth track (and it has been for 11 quarters now), we were producing with 3.4 percent fewer people. That’s 6.1 million fewer jobs spread across the nation.”
“So how is Indiana doing?” I asked as if inquiring after a distant aunt.
Crusty’s normally stoic face softened as he said, “Not as good I’m afraid. Our output in 2010 was still down by 1.4 percent and our employment off by 4.9 percent, about 181,000 people.
“But here’s the good part of all this: Our productivity has climbed,” Crusty boasted like a proud grandparent. “In the nation, productivity (GDP per job) climbed by 3.2 percent while Indiana did even better, going up by 3.6 percent.”
“That’s perverse,” I growled, energized to speak. “You focus on a statistical sliver of silver in the gray cloud while millions of Americans go unemployed.”
“Now wait just one minute,” Crusty protested. “I too am disturbed by the unemployment, but as a nation we have to see the current conditions as opportunities. The country is out of the recession and enjoying higher productivity. This gives us the chance to find jobs for the unemployed doing useful things rather than going from place to place looking for jobs. Higher value per job means more capability to support other jobs.
“Yes, yes, I know,” Crusty looked at each of us individually, “it means creating jobs to meet national and local needs. However, you sit here and decry unemployment, but you do not support employing the jobless. That’s plain hypocrisy!”
Crusty left us at that point. No one had anything to say.
Morton Marcus is an independent economist, writer and speaker formerly with the IU Kelley School of Business.
Business
EYE ON THE PIE: Use to be close tie between output, employment
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