Friday, July 8, 2011

Hours Worked per Person Flatlining

Hours Worked per Person (Employment to Population Ratio x the Average Work Week of Private Workers), shows the sluggish rebound in "labor usage" relative to the population.

The concern... for the last 25 years there has been a very strong relationship between hours worked per person and real GDP growth (a decent relationship prior to 1986, but with a lot more noise), but notice the huge gap since the "recovery" began.

Unless "this time is different" there are two possibilities:
  • The Good: Employment will follow (it just needs an unprecedented amount of time)
  • The Bad: The economy is outperforming due to all the government support / transfer payments, the impact of which will be fading going forward
Source: BEA / BLS