Jobs v. Social Consumption

Productivity growth often gets the blame for why we are in a "jobless" recovery (a clear exaggeration since jobs are actually growing and unemployment is lower now that the average rate for either the 1980s ot 1990s--but the perceptions persist that jobs aren't coming back as fast as economic growth.) While it is undoubtedly true that job growth will lag economic growth when productivity is on the rise (because companies will grow via increased productivity, rather than increased workforce) it is also true that the fully-loaded cost of a workforce is extraordinarily high, and that "social consumption" costs, such as legal and health care costs, have a dragging effect on job growth. This has the same effect as minimum wage laws--higher costs, fewer jobs. Some may prefer the host of social costs as essential components of modern employment, but none should be ignorant of the impact of these costs. Holmen Jenkins makes the case well in yesterday's editorial. Excerpt:

American workers more than hold their own in global competition with their higher productivity. The same productivity also picks up the tab for, say, a product liability system that has become a random lottery of wealth distribution; a health-care system that subsidizes excessive and inefficient consumption; environmental and workplace regulations unmoored to any reasonable balancing of costs and benefits.

Workers wonder why higher productivity doesn't translate into higher wages -- because it's all being sucked up to pay for such dubious social consumption. Their hard work benefits somebody all right: health-care workers, government employees and tort lawyers are all job categories noticeably immune to downsizing or outsourcing.