Wages and Productivity

Edward P. Lazear published his Prepared Remarks of his Address to the National Association of Business Economics on September 12th. He contends that the average monthly Job growth rate for 2006 will be 135,300. It would seem to be a fairly defensible rate. The declining Unemployment rate to 4.7% is definitely not, coming only through a drop in Labor Force participation. It presents even worse image, when the majority of his Address directs to the major problem of the future: this being the increase in Dependency rates due to the Ageing population over the next half-Century.

Lazear contends "Output per capita is approximately 30 percent higher here than in the developed European countries and Japan." This is debatable on several levels, as the Countries involved have less Labor Hours averaged per Worker, along with greater security Welfare from Government programs, amid debatable equivalences with the American Standard of Living; All within a forum of lower Consumer Pricing. There are alternate methodologies to the American Drive Productivity. Lazear also submits a theoretical cure for future Dependency rates in America as increasing the Capital/Worker rate.

Japan’s core increase in Corporate Goods Pricing of 3.4% year over year highlights the major problem with the Lazear cure for the future. The push was Energy driven, and pushing the Capital/Worker rate stands as the most energy-intensive methodology for increasing Productivity of Labor. We need a less-intensive energy consumption Economy, with lower Cost Capital Equipment, and lower Consumer Prices. We also need a higher Labor Participation rate with Labor working less, but more Years in duration. Even Conservative Economists will eventually have to adopt this strategy.

The U.S. Trade Deficit just hit a record $68 billion in July, based solely on the increase in Oil prices. The American economic growth factors stand as totally dependent on Energy consumption, and in 50 years, the American economy will face the absolute need to import Oil to sustain its basic economy. The Conservative Economic approach does not sustain long-term maintenance of the American economy. llgl