Chronic Murmuring

This makes sense in light of the changes in manufacturing that have resulted from the implementation of Continuous Improvement and lean systems. To reduce labor costs, manufacturers are improving processes and getting rid of the easier type jobs that constitute part of the waste in the production process.

Thanks for that, Joseph. I'm not familiar with what those are, exactly. You're in human resources. What do you see going on with hiring right now? In the labor statistics, there's increases in productivity everywhere, but new jobs are not being made. From checking around, it seems to have several economists more than a little befuddled. I figure there's just a lag between the rebound and the actual hiring, and that it's too soon to say anything yet. But others seem much more perplexed than I am, and it has me wondering if there's more to the "drain current workers to the bone before hiring anyone new" story. I mean, I'm sure that's true and all, but it seems like that would always be true, and not just right now.

I wouldn't characterize it like that, but I'd say that productivity is higher today. This could be due to job expansion in which workers are given more and more responsibility.

What we're seeing, Scott, is the evolution of the assembly line from a line with highly-specialized labor to flow-based production cells in which employees have greater responsibility and more tasks to perform.

The US has much less vacation time than other western countries. Do you guys think this will continue? What if companies are pressured to provide more vacation time, what effect will this have on productivity and jobs?

Well, if it was mandatory (legally), then it would raise the costs of hiring American workers. We're reaching a point where the factors of production (labor) are more mobile. Transportation is much more affordable now. Secondly, workers in the rest of the world are becoming more skilled due to increases in capital and increases in human capital. And technology, being a public good, spreads easily to the rest of the world. So, if you did impose regulations of that sort on American firms, you would raise the costs of hiring American workers, probably followed by some decrease in employment, and an indeterminate change in productivity (could be an increase in productivity if the drop in employment is greater than the drop in output; could be a decrease if the other way around).

Regulations impose costs on firms, and therefore you would expect firms to try and avoid those costs if at all possible. Globalization means a worker in Philadelphia - for some industries - is competing with a worker in India. Not for all industries, but for some. In those industries, if the elasticity of demand was high enough, then raising those costs could trigger a move away from that pool of people altogether. I'm not saying that would happen, but theoretically it could very well happen, and the magnitudes could very well be high. That recent post I made quoted a businessman who said he was doing all he could to not hire any new American workers because the associated costs in doing so were prohibitively high. This is not difficult to see, because already, firms are required to provide benefits beyond the actual wage, which is another way of saying that the wages for workers is hiring than the nominal wage itself. Since they can't cut back on those benefits, legally, they may just not hire anyone at all and try to pursue other alternatives - even if the other alternatives are less desirable, ultimately, from the firm's perspective.