Will the United States Experience a ‘Jobless Recovery’?

BY busadmin  June 14, 2010 at 2:41 PM EST

Question: Paul, I have read some of your letters on a “jobless” recovery. To the point, do you think our nation will experience a jobless recovery? Right now I can’t even buy one!

Paul Solman: Can’t buy a recovery or can’t buy a JOB, Larry? Assuming you mean the former, yes, I worry a lot about this.

Now ultimately, there should be enough jobs to go around. Human beings should be able to figure out enough things to do for one another to keep all of us gainfully employed. Take massage, for instance, as just one of many potential thought experiments.

Massage school owner Juliet Mee was being conservative, I thought, when she told us recently that every American over the age of 16 would seriously benefit from getting a one-hour massage once a week. She also said a massage therapist should do no more than five sessions a day. There are some 240 million Americans over the age of 16. There are some 15 to 20 million unemployed, depending on how liberally you count. You do the math….

Okay, I’ll do it for you. 240 million Americans getting a one-hour massage a week: that’s almost 10 million full-time, 40-hour-a-week massage jobs right there, which would HALVE the unemployment rate, actually get us down near what’s considered “full” employment, because so many people are only temporarily out of a job at any point in time.

So what’s the problem? Obviously, that it would take a very long while to get from here in 2010 — 100,000 or so licensed massage therapists — to the fanciful there: a workforce with 10 million muscle kneaders who no longer need a job.

Generalize to ANY new jobs, and you see the problem: getting from here — the current unemployment situation — to there — a world of new jobs.

There is another approach, being promoted by such unlikely economics bedfellows as Dean Baker, of the liberal Center for Economic and Policy Research, and the American Enterprise Institute’s Kevin Hassett, an advisor to John McCain’s campaign.

Here’s Hassett in November of last year:

The policy in question is called ‘Kurzarbeit,’ which translates approximately as ‘short work.’ Firms that face a temporary decrease in demand avoid shedding employees by cutting hours instead. If hours and wages are reduced by 10 percent or more, the government pays workers 60 percent of their lost salary. This encourages firms to use across-the-board reductions of hours instead of layoffs….The economic argument in favor of such a policy is powerful.

Also, the eminent sociologist and author Juliet Schor has a book just out, “Plenitude: The New Economics of True Wealth,” which makes the case for cutting back in general and says it’s already happening:

In pockets around the country and the world, people are busy creating lifestyles that offer a way out of the work and spend cycle.

One policy that would obviously contribute to those lifestyles: a shorter work week.