If Business Confidence Explained Lack of Hiring, Then Hours Per Worker Would Be Increasing

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Wednesday, 21 July 2010 07:27

Business people always want more money. That is part of a being in business. (Has Goldman Sachs or General Electric ever said they want lower profits?) This means that their spokespeople can be counted on to complain about taxes, regulations, wages or anything else that costs them money. Sometimes what they say is not true.

This can be clearly seen with current complaints that fears about regulation and higher taxes are discouraging hiring. This claim can be easily tested. If firms are in a situation where they would be hiring except for these fears, then we should be seeing an increase in the average number of hours worked per worker. We are not seeing an increase in hours worked that is at all out of line with prior recoveries. In fact, in the June data, hours worked fell. 

Reporters should examine whether the claims of business people are plausible instead of just repeating them.