Mises Daily Friday: Job Growth Doesn’t Mean We’re Getting Richer

In response to recent claims by the Obama administration and others that ‘millions of jobs’ have recently been created, I examined the data here at mises.org to see if the claims were true. It turns out that job growth since the 2008 recession has actually been quite weak, and hardly something to boast about.
Nevertheless, our conclusions from these analyses tend to rest on the idea that job growth is synonymous with gains in wealth and economic prosperity.
But is that a good assumption?
In an unhampered market, the answer would be no, for several reasons.
First of all, as worker productivity increases, workers would need to work fewer hours to maintain their standard of living.
Second, as goods become less expensive (as a result of rising productivity) it would also be necessary to work fewer hours to maintain the same standard of living.
This need for fewer man-hours could translate into shorter work weeks and shorter days, but it could also manifest itself at the household level in the form of changes from two-income households to one-income households. Or, people may retire earlier, thus leaving the work force.
In other words, in a well-functioning economy over time, less human labor will be necessary to maintain standards of living, all things being equal. (If consumers wish to constantly increase their standard of living of course, they will chose more labor over more leisure for the sake of more consumption.)

This post was published at Ludwig von Mises Institute on MARCH 25, 2016.