And while the American economy has come back more robustly than some of its global rivals in terms of overall production, the recovery has been strangely light on new jobs, even after Friday’s better-than-expected unemployment report. American companies are doing more with less.I do not like thee, Doctor Katz. The reason why... well, actually, in 1998 Katz wrote a commentary to an article by Jennifer Hunt that contained one-half of one of the most duplicitous arguments I have seen in my life (it offers a clue to why a jobless recovery is a "very big puzzle" to Katz): "if hourly wages rise and labor is viewed as more inflexible, such policies could induce capital substitution for labor."
"This still is a very big puzzle," said Lawrence F. Katz, a Harvard professor who was chief economist at the Labor Department during the Clinton administration. He called the severe downturn in jobs "the million-dollar question" for the economy.
What's wrong with that? That's only half the argument; the other half, delivered in a 2011 white paper co-authored with David Autor: "Technological improvements create new products and services, shifting workers from older to newer activities. Higher productivity raises incomes, increasing demand for labor throughout the economy."
It helps to understand that "technological improvement" is a euphemism for "capital substitution for labor." They're both hollow platitudes but with contrary spin. Use the former phrase when you want everyone to think everything will work out just fine and dandy (in the long run). Use the latter phrase when you want to warn against unwise policies that might -- shudder! -- lead to higher hourly wages.
It's a perfect heads I win, tails you lose trifecta! And how do I know that "technological improvement" and "capital substitution for labor" are two sides of the same coin for Katz? Simple. They both proceed from "lump of ___ fallacy" claims:
Many individuals believe that cuts in the work week (that is, reductions in working hours per worker) can reduce unemployment. In what has been labeled the lump of output fallacy, most advocates of work-sharing implicitly assume that output is held constant in response to a policy effort to reduce hours per worker, so that total hours of work to be done each week are unchanged... (1998 -- "capital substitution for labor")
This ‘lump of labor fallacy’—positing that there is a fixed amount of work to be done so that increased labor productivity reduces employment —is intuitively appealing and demonstrably false. (2011 -- "technological improvement")If anyone wants to track down these citations and verify my interpretation, you're welcome to do so. I won't bother a point-by-point explication because I've learned that trying to explain gibberish just confuses people. There's nothing to explain. It's self-contradictory gibberish.
Anyway, according to the impeccable Katz logic, there is no need for higher hourly wages because "higher productivity raises incomes" (presumably without any capital substitution-inducing demands for higher hourly wages from workers).
Or perhaps those raises in income come from working more hours with no rise in hourly wages? As Professor Katz has shown, there is more than one way to skin a worker. Workers may want to know that there is more than one way to skin a Katz:
It is a fallacy to suppose that Katz are skinned alive. In the first place, to skin a Katz when alive would be utterly impossible; and, secondly, it does not make any difference in the quality of the skin. The origin of the fallacy is probably that a Katz is easier skinned immediately after death than if allowed to become rigid. It is very remarkable how fashions set by English ladies influence wild and tame animals even in the most distant parts of the world. I am very glad the ladies have made Katz fashionable, as at last some use is found for these animals, which, being untaxed, are so abundant that any night, and in any weather, Katz—many of them half-starved—swarm in the London streets, and the poorer the neighbourhood the more abundant are the Katz.