Romney and Robert Samuelson Are Wrong: Employers Are Not Reluctant to Hire

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Monday, 10 September 2012 04:34

The Romney campaign has picked up a theme pushed by Republicans ever since President Obama entered the White House, employers are reluctant to hire because they are scared by regulations and taxes. Robert Samuelson picks up this line in his column assessing whether the economy can actually create 12 million jobs over the next 4 years.

There is a simple way to prove that employers have no reluctance to hire. We can look at average weekly hours. If employers are seeing increased demand but don't want to hire because they fear an attack from the regulation monster or higher taxes, then they would work their existing work force more hours. That one should be pretty painless even for our fearful job creators. After all, do we really think that they would turn away customers from their stores, restaurants, and factories rather than have workers put in a few extra hours each week?

Here's what the Bureau of Labor Statistics tells us about weekly hours:

    Average Weekly Hours: All Employees

hours-09-2012 Source Bureau of Labor Statistics.

In short, there is no story of reluctant employers, the problem is inadequate demand pure and simple. If employers saw more demand, they would likely hire more workers.

There is one other point worth mentioning in reference to Samuelson's evaluation of the 12 million jobs claim. Samuelson is a skeptic, noting that the economy has rarely added 3 million jobs a year in the past. That is not terribly relevant because the labor force was smaller in the past. The question is the rate of growth.

The economy did add 12 million jobs from 1996 to 2000, at a time when the labor force was almost 20 percent smaller than it is today. The 12 million jobs number is a very reasonable target. There is of course no guarantee that the economy will add this many jobs, but if we are to get back close to full employment by 2016 (8 years after the beginning of the recession) this sort of job growth will be necessary.

Addendum: The title of the graph was corrected. Also, the story here is that hours are still somewhat below their pre-recession average. That was presumably a period in which employees were not reluctant to hire because they feared taxes, regulation or whatever else. If the Romney-Samuelson story were true then hours should be above the pre-recession average. The idea is that employers would otherwise be hiring, but because of their fears about the future, they are opting not to.