What Is a Jobless Recovery?

BY busadmin  October 13, 2009 at 2:30 PM EDT

job fair; Getty Images

Question: You have talked about a jobless recovery. What does it mean?

Paul Solman: Boy, have we ever! Indeed, we did a whole series on the so-called “jobless recovery” back in 2003, one of whose stories was our first effort at reckoning the true rate of unemployment. We were moved to produce an updated version just this July.

At first glance, the phrase “jobless recovery” seems an oxymoron. How can there be more economic activity without more jobs? If more things (or services) are sold, the income must go to SOMEONE, mustn’t it? That SOMEONE must spend or save it. If s/he SPENDS on stuff and/or services, those supplying them will have jobs. If s/he SAVES it, that savings will presumably be loaned out to individuals to SPEND (again, creating jobs) or to businesses to INVEST — building factories, developing new software and suchlike. But again, jobs will be created, no?

Well, yes, but — HOW MANY jobs? Say that your humble economics servant — the proprietor of this page — were to build a Cornucopia Machine (an idea long in the works, as it happens). The machine can be reprogrammed to transform any molecules, in any form, into any object that the world’s consumers, in their infinite wisdom, desire. Deploy these machines worldwide, and I can provide the whole world with anything its collective heart desires.

Assume further that it doesn’t take a boatload of programmers to do the job. Sure, I’ll have to hire distributors, marketers, quality control folks. But eventually, not so many, perhaps.

Note that my employees can buy everything tangible they may ever need from MY Cornucopia machines — my “horns,” let’s call them. Suppose further that these employees have the same needs as you and I for services, but that these too will be provided more and more efficiently over time with At-Your-Bidding machines, aka robots. Or cheap labor from poor countries.

In this vision, I make a bloody fortune. I share it with a relatively few employees. They spend on my products and largely automated services provided by relatively few others. What have we got? Utopia? Dystopia?

Depends on how the proceeds get distributed throughout the population, I’d guess. But the thought experiment is meant to illustrate the idea that greater wealth could conceivably be created with fewer and fewer jobs, and certainly fewer jobs here in America. And maybe that’s what’s been happening – for years, now.