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@Alon @jamisonnbishop @ryanlcooper @interfluidity For the recent US productivity downturn, perhaps firms hiring lots of new workers who take some time to get in the groove? For the larger patterns, especially international…??

@SteveRoth @Alon @jamisonnbishop@mastodon.social @ryanlcooper i think this is maybe restating @Alon’s point, but one conjecture would we are experiencing a labor bargaining power hangover. “labor hoarding” is the phrase the US press uses, but what it means is that businesses perceive labor relations as precious, potentially hard to replace or scarce, rather than disposable and replaceable on demand. so they err on the side of retaining workers, rather than dismiss and rehire them. 1/

@SteveRoth @Alon @jamisonnbishop@mastodon.social @ryanlcooper this would be a pro-employment result of the US’ extraordinary fiscal support during the pandemic. over the last few years, workers experienced getting by without current work — it became thinkable — and they accumulated savings that, even for a while after supports ended, meant “take this job and shove it” remained on the table. 2/

@SteveRoth @Alon @jamisonnbishop@mastodon.social @ryanlcooper thanks to state support, workers were (qua @Alon / Meidner) perceived as having wings, rather than hiding desperately under shells praying for the beneficience of employers. 3/

@SteveRoth @Alon @jamisonnbishop@mastodon.social @ryanlcooper in the stupid Econ 101 imagination, there is only price and quantity, and labor supports can only shove the supply curve outward, reducing quantity employed. 4/

@SteveRoth @Alon @jamisonnbishop@mastodon.social @ryanlcooper in a civilized world, labor is people, employment is a relationship, employers who become available then unavailable, “sleep around” looking to replace you, are employers workers can and do avoid. 6/

@SteveRoth @Alon @jamisonnbishop@mastodon.social @ryanlcooper for the first time in 50 years, from 2021, US employers have got a taste of a civilized labor market. even as household employment declines (gig workers find it harder to hire themselves), employers retain the relationships they’ve established, are less likely to let go. 7/

@SteveRoth @Alon @jamisonnbishop@mastodon.social @ryanlcooper in a civilized world, what that leads to is a profits recession, not a labor recession at all, profit margins (i think still near double historical norms) normalize while workers remain employed and employable. 8/

@SteveRoth @Alon @jamisonnbishop@mastodon.social @ryanlcooper it remains to be seen how civilized our country is willing to be. what if the stock market declines even while employment is tight and interest rates are steady? is that even thinkable? /fin

@interfluidity @SteveRoth @jamisonnbishop @ryanlcooper Yeah, but in such a civilized setup, productivity rises rather than falling. Labor hoarding is usually a phenomenon of recessions (for workers who are not laid off, who comprise the vast majority). During growth, what we're seeing is employer complaints that workers are changing jobs too rapidly and without giving notice, or in other words redistributing themselves to higher-productivity, higher-pay work.

@Alon @SteveRoth @jamisonnbishop@mastodon.social @ryanlcooper In a world where employers perceive high costs to finding employees and so hold onto employees through the business cycle, measured productivity declines overall. during periods of lower demand, labor hours are expended for the nontransactional benefit of maintaining relationships, which does not appear in GDP, reducing apparent productivity. 1/

@Alon @SteveRoth @jamisonnbishop@mastodon.social @ryanlcooper In a world where employers fire very freely, we see the morally counterintuitive result that productivity rises in recessions. Businesses fire employees whose hours contribute least to revenue generating transactions, raising the average of revenue per hour. Plus they can work those they retain harder, as "the sack" becomes a very credible threat. 2/

@Alon @SteveRoth @jamisonnbishop@mastodon.social @ryanlcooper Treating productivity as we measure it as an unmitigated virtue is perilous. Yes, we want to maximize welfare generated per hour worked. But productivity doesn't measure welfare, it measures GDP, the macro analog of revenue. There are obvious wedges between welfare and revenue when firing someone doesn't much hit revenue but condemns a person to penury. /fin

@Alon @SteveRoth @jamisonnbishop@mastodon.social @ryanlcooper (The better matching you describe in boom periods could counter to some degree my claim of lower measured productivity over the cycle, but to the degree there are matching gains to be had from job-switching, there might be tensions between the worker scarcity and so security “labor hoarding” yields, encouraging switching, and the relationship-building attached to that, discouraging it even in booms.)

@interfluidity @SteveRoth @jamisonnbishop @ryanlcooper Don't forget that your theory needs to predict reality: US GDP per hour was basically even with Northern Europe and France but has been pulling ahead since 2019; France and Germany both had dips in productivity in 2009 whereas the US did not, but did have a period of slow growth. Re firing freely, the typical employer behavior in recessions is to do a big layoff early, to credibly promise the workers who stay that they will not be laid off.

@Alon @SteveRoth @jamisonnbishop@mastodon.social @ryanlcooper i’m not sure what the dispute is? here’s (mobile-scale) US labor productivity by the most common measure. note how it pretty reliably spikes by the end of recessions (including 2020), as businesses fire workers and do less with more (degree to which that’s a result of working them harder vs selection effect of who gets fired is arguable).

@interfluidity @SteveRoth @jamisonnbishop @ryanlcooper Wait - the timing of the end of the recession is heavily based on GDP growth, so it should be expected that the last quarter of a recession should have growth...

@Alon @SteveRoth @jamisonnbishop@mastodon.social @ryanlcooper since that early 1990s recession, the stylized fact is “jobless recoveries”. fast GDP growth not matched by employment growth. growth itself does not imply productivity. the question is what labor “produces” (it’s really just a ratio) that growth. 1/

@Alon @SteveRoth @jamisonnbishop@mastodon.social @ryanlcooper at the end of a recession is when labor markets are loosest. you might argue then that this is exactly when you’d expect growth to be a function of recruiting labor. but that’s not what happens. “productivity” happens. growth picks uo much faster than labor. /fin

@Alon @SteveRoth @jamisonnbishop@mastodon.social @ryanlcooper I’m very sympathetic to “hysteresis” arguments that suggest the long-term effect of recessionary economies is sluggish demand, lower growth and productivity that might have emerged in a “run the economy hot” counterfactual, where people would spend more securely and full employment / rising wages create incentives for labor-augmenting innovation.

@Alon @SteveRoth @jamisonnbishop@mastodon.social @ryanlcooper There’s just a very mechanical short-term effect. Business’ capacity to produce does not fall linearly with the marginal workers fired. So the immediate effect of a recession is a productivity increase, once demand comes back towards capacity. I don’t at all claim it’s a good thing overall.