The U.S. Department of Labor today release its Jobs Situation Report. The labor market saw an increase of 242,000 and the unemployment rate remained at 4.9%, the traditional indicator of full employment.
I suspect the Obama supporters will heap praises on him for this better than expected report, but in my opinion, any increase in employment will be the result of two factors and two factors only.
First, an increase in the number of people hired results from labor’s ability to demonstrate to producers that hiring an additional person will bring to the producer returns that at least equal the additional cost of bringing on additional labor.
Second, an increase will result where the producer determines that hiring additional labor brings value to goods and services being produced for demanding consumers.
The opposite is also true. Where labor cannot demonstrate that it will bring additional value to the production process and the producer does not identify additional benefits from hiring labor, employment will decrease.
I find it at times amusing and at other times downright scary that so many people will underestimate labor’s ability to persuade the labor market that it needs more employees and producers’ ability to identify the need for and the benefits flowing from additional labor. These very same worshipers of the State would rather give credit or blame to a president or a congress. While by law the executive and the congress are responsible for monitoring and managing the economy, in reality they have little to do with the economy’s performance.