Thursday, July 2, 2009

Labor Market Continues Down

Employment is still falling pretty sharply.

While GDP has hardly surprised me, I did not anticipate last fall that employment would get so low. Even with the benefit of hindsight, I am not sure I see a complete explanation.

Part of the story is the plethora of means-tested public policies: they discourage work and raise employer costs:

  • Mortgage modification
  • Student loan forgiveness
  • IRS enforcement of prior tax debts
  • extended unemployment benefits

But likely there is more to the story: too bad I don't know more than that.

1 comment:

Unknown said...

what about employers doing a forecast and deciding they only need 90% of the labor they have? Is that too easy, or does the government have to make them do it for you to see it? I know, I just reduced headcount at my shop by is not there to keep everyone around...