Working harder and hardly hiring

[xchrom]

http://www.economist.com/blogs/freeexchange/2011/09/growth-and-jobs

WHENEVER the Bureau of Economic Analysis releases new data on sub-national output, I find it interesting to dig in and see if state and metropolitan economies are behaving as Arthur Okun would have us expect. Where growth is occuring, is it translating into the expected change in employment?

This week, BEA put up new figures on metropolitan GDP, for 2010. Here's a look at the change in GDP for that year and the change in the unemployment rate for the 50 biggest metropolitan economies (many thanks to our research and graphics departments for their help with these):


A couple of things stand out here. One is that way too many of these economies experienced growth under 3% in 2010. Another, however, is the general negative relationship; across these cities faster growth seemed generally to translate into a bigger drop in the unemployment rate, as we'd expect. To a large extent, then, America's employment shortfall looks like a growth shortfall.

[dkf]

1. Kind of obvious.

[Warpy]

2. No demand, no jobs to meet demand that isn't there.

Economies are driven by labor creating demand and adding value to raw materials to satisfy that demand. The plutocrats just scrape the gravy off the top. The more gravy they scrape, the more likely they are to start taking the meat underneath and dry up demand.

That's why economic inequality crashes the economy every single time, that and the fact that the plutocrats try to keep the game going by encouraging labor to go into debt to meet its needs and wants instead of paying them enough to satisfy them by their labor.

This isn't a growth crisis, it's a demand side crisis. The cure is taxing the ill gotten gains away from the plutocracy and using it as seed money for government projects to get people working and increase demand.