Matt Yglesias

Hours Worked Hits Record Low

Via Planet Money, more bad labor market indicators:

This gives you a gauge of labor market conditions that’s in some ways broader than any of the unemployment rates. The BLS says it’s “the lowest level on record for the series, which began in 1964.”

10 Responses to “Hours Worked Hits Record Low”

1. daveNYC Says:
   July 7th, 2009 at 9:25 am

   Damn. Seeing that makes me want to punch all the people talking about the second derivative.

2. Steve Sailer Says:
   July 7th, 2009 at 9:31 am

   This graph is misrepresentative Matt, since it only records the hours worked officially. If you checked the actual hours of effort, versus, say, eating fried chicken or watermelon, then you would have a much lower number still.

3. DTM Says:
   July 7th, 2009 at 10:31 am

   That is not actually a particularly broad employment indicator because it gives the average hours of people actually working in production, construction, or non-supervisory positions. What Matt probably was thinking of (at least implicitly) is the index of aggregate hours worked (Table B-5, instead of Table B-2), which is the product of average hours time the number of people employed (indexed to the annual average for 2002). The B-5 index is indeed a quite broad measure of employment in some sense, although it can obscure some of the negative effects of unemployment insofar as the distribution of hours matters and the potential labor pool is expanding (see more below).

   Seeing that makes me want to punch all the people talking about the second derivative.

   Since the data points are annual in that chart, it doesn’t really motivate such a response. If you look at the monthly B-5 index, or alternatively smooth it by quarter, the “second derivative” argument holds up OK (the June numbers are down a bit more than we would like on a seasonally adjusted basis, but the seasonal adjustment probably sets too optimistic of a baseline in the current environment).

   On the other hand, the “second derivative” argument is really just a crude form of the more general argument that the current economic indicators are still suggesting a general economic turnaround sometime later this year or early next year–but, it is important to note, not necessarily soon. And even if aggregate hours worked turns around at approximarely the same time as the general economy, we’ll still be dealing with unemployment issues for quite a while after that point: the likely initial response will be to increase hours for the employed as opposed to hiring new employees, and meanwhile population growth is continually expanding the labor pool.

   To sum up, I don’t think it is worth getting angry over the “second derivative” arguments. I’d just point out those arguments don’t have particularly cheerful implications, other than that it would be even worse if we weren’t seeing any preliminary indications of a general economic turnaround by this point in the recession.

4. ron Says:
   July 7th, 2009 at 10:43 am

   As Al Jolson used to say: You ain’t seen nothin yet!

   Based on the anemic response to date in the financial and stimulus arenas, we are headed for WORSE than the great depression.
   Finance will continue to suck money out of the real economy while aggregate demand falls further and stimulus activity lags far behind what is needed.

5. Jeffrey Davis Says:
   July 7th, 2009 at 11:00 am

   Based on the anemic response to date in the financial and stimulus arenas, we are headed for WORSE than the great depression.

   Cheer up. Most of the stimulus money hasn’t been spent yet.

6. DTM Says:
   July 7th, 2009 at 11:49 am

   Based on the anemic response to date in the financial and stimulus arenas, we are headed for WORSE than the great depression.

   As I have noted before, the stimulus so far has mostly taken the form of transfer payments. And those transfer payments are demonstrably working to increase disposable personal income: the problem is that most of that additional income is going into savings. The good news is that eventually repairing household balance sheets should help prevent a true Great Depression scenario. The bad news is that it isn’t helping moderate the recession much in the short term.

   Meanwhile, the direct spending portion is just getting started, and that should be more effective in the short term. This was always the known tradeoff: the transfer payments would start sooner but have less immediate effect. The direct spending would start later but have a more immediate effect. There just wasn’t a program that would both start and have a strong effect immediately.

   Nonetheless, I would agree that a second stimulus of some sort is likely warranted, particularly now that we know that unemployment is going to be worse than we originally hoped. But even without a second stimulus, I still don’t see any real reason to believe in the Great Depression scenario. Rather, I think the absence of a second stimulus would just mean a somewhat slower recovery than otherwise.

7. ron Says:
   July 7th, 2009 at 11:59 am

   In my view we are now in a deflationary vicious cycle. A severe jolt is required to shift the momentum and we haven’t seen that yet.
   In the 30s WPA and other programs actually reduced unemployment. I don’t see adequate stimulus to do that now.
   I believe active, massive intervention is required.
   Of course, I would prefer to be wrong.

8. DTM Says:
   July 7th, 2009 at 1:30 pm

   ron,

   I will grant it is going to be impossible to definitively prove you wrong unless and until unemployment starts trending back down, and that is unlikely to happen for many months, even assuming I am right.

9. JonF Says:
   July 7th, 2009 at 6:30 pm

   I’d like to know how these stats are derived. Are they just counting hourly workers whose daily hours are presumably on record somewhere? What about the legions of salaried workers who are still expected to put in lots of unpaid overtime, especially after several rounds of downsizing have left their places of employment severely understaffed? There are a lot more exempt workers nowadays than there were a generation ago (let alone in 1964).

10. DTM Says:
    July 7th, 2009 at 9:38 pm

    I’d like to know how these stats are derived.

    They conduct a monthly survey, called the Current Employment Statistics survey. It samples about 150,000 business and government employers.

    What about the legions of salaried workers who are still expected to put in lots of unpaid overtime . . .

    My understanding is that those hours should be captured by the survey.