An assistant professor of economics e-mails:
Don’t get taken in by the “higher productivity = unemployment” argument. Productivity has been growing for the last century, yet somehow we have MORE jobs than we did 100 years ago. Remember the 1990s? Productivity surged because of computers – and jobs and wages also grew at their fastest rate in decades. Why doesn’t productivity eliminate jobs? It’s the fallacy of composition – productivity may eliminate jobs in one industry. But then those products become cheaper, effectively putting more money in consumers’ pockets, and leading to job-creating booms in other industries. One industry sheds jobs, but the economy as a whole gains jobs. Marx never figured that out, which is where the “productivity as contradiction in capitalism” came from. Is our current unemployment mess due to productivity that never caused a problem in the past? …. or just maybe to the sharpest contraction in GDP in 80 years, and consumers who are saving to rebuild their net worth?
Another reader speaks from personal experience:
I wonder how much overall productivity numbers are influenced by worker productivity increases in the aughts. Because I believe worker productivity increases were (and are) a function of massive layoffs, where the remaining employees absorb the duties of the laid-off workers and take on increased hours without overtime pay (and often without pay raises). More work, fewer employees, less wage costs.
To me, one of the best ways to get Americans back to work is to reform federal laws regarding the 40-hour work week. Right now, companies are using the piss-poor economy to prevent disgruntled, overworked employees from leaving their jobs for greener pastures. Because there are no greener pastures.
Currently, if three of your co-workers are laid off, and you absorb a good portion of their duties without a pay increase, what can you do? You were hired to work a job that required roughly 40 hours a week. Now you're working 50 to 60 with no extra pay (or a relatively modest pay increase). I'm in that situation myself. And I'm pretty sure my extra hours are not legally exempt from overtime pay. But I need my job. So there's no wisdom in seeking recourse.
A final reader dissects the example I gave:
The individual baker can't compete with Safeway. Nor should they try. The success of these small, personal contact-oriented businesses is exploiting the niche market space the large businesses abandon because they aren't profitable. Individualized, high-quality product is not profitable for Safeway, so they focus on lower to mid-quality consistency with less personal contact, and compete on price. But the market for the more personal, high-quality items doesn't disappear, and a well-run small business can exploit that niche. But the key to that business's success, I think, is being comfortable with non-growth oriented success while serving that niche market. Make decent profits, serve your customers, manage your quality. Because if growth is the goal, and they work towards growth, they will ultimately lose the quality while butting up against Safeway's market at some point. And then they will lose, because they'll rarely if ever be able to match Safeway's economies of scale.
The Dish 