While job losses are hampering down optimism for recovery in the near-term, productivity numbers released today was a whopping 9.8%. Makes sense considering the large number of job losses mounting while output had increased 3.5%. Although job losses are bad in the near-term, in the long-term, higher productivity leads to more income. So while some people are feeling the pain with one of the worst labor markets since the great depression, businesses are handling the recession most effectively by creating value and income growth for the mid-to-upper echelon of the American public.
This unfortunately leaves many in the bottom quin-tiles of the economic ladder left behind. The BLS’s “Alternative Measures of Labor Under-utilization” (basically underemployment) clocking in at 15.2% illustrates how poor the labor market really is. I have recently posted my thoughts on what I call the “new unemployed,” which is going to drastically shape the economic environment for the future of America unless important structural changes happen such as making investments in technical and vocational education that will help yield a more specialized workforce.