Our Job Machine Sputters Again
Nightly Business Report: TV: June 6, 2005
The great American job machine is sputtering again: only 79,000 new payroll jobs in May. We are still four million or so payroll jobs below where we might five years ago have reasonably expected to be by now--but at least, at 133.3 million, we are above the last business cycle's peak.
The later stages of an expansion are usually a golden time for workers. Businesses are anxious to grasp opportunities, and bid up wages and salaries, which run ahead of prices, and put downward pressure on profits. In the last business cycle profits peaked three and a half years before the business cycle peaked itself: 1998, 1999, and 2000 were years in which more than 100% of the benefits of each year's growth went to labor, and less than zero went to capital.
Not this time. In the current cycle, wages have fallen 12% and total compensation 8% behind overall growth. And now it looks like the current cycle may be cut short as the Federal Reserve gears up to fight inflation from oil and import prices.
The current cycle may well turn into the only one we know of over which capital gains, but not labor.
I'm Brad DeLong
