Stagnant Private Sector
Written By: Robert Higgs | Posted: Tuesday, August 17th, 2010
With the fall elections just three months away, President Obama recently summoned corporate leaders to the White House again to urge them to start hiring.The president doesn't seem to understand that his own policies have created pervasive uncertainty about the government's future actions, causing many private investors to steer clear of new commitments to long-term investment -- the kind that gives rise to additional private-sector jobs.
The unemployment situation, of course, is dismal. According to the Bureau of Labor Statistics (BLS), the standard unemployment rate more than doubled after the economy began to contract early in 2008 and now seems stuck near 10 percent. More significant, however, is the employment shortfall, because hours worked, in conjunction with the productive use of capital, natural resources and energy, gives rise to what we really want from the economy: goods and services. BLS data show that between 1960 and 1970, the number of hours worked in the private business sector increased 12 percent. In each subsequent decade -- 1970-80, 1980-90, and 1990-2000 -- hours worked increased 18 percent per decade, or about 65 percent overall from 1970 to 2000.
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