For the past three years we have been pounding the table on one very simple fact: when it comes to jobs, there is a quantitative picture, which is often muddied by seasonal adjustments and political narrative but which the mainstream loves for the simply, clear plotline: "the US created [ ] jobs in the past month", and there is a qualitative one: one which takes into account the far more important quality of the jobs created in the US economy in whole or in part (such as in various states). It appears this simple logic has finally trickled down to those masters of the obvious at the San Fran Fed who have just released a paper titled "Job Growth and Economic Growth in California" whose summary is as follows: "California job growth over the past two decades has been relatively anemic compared with gains in the rest of the country. Nevertheless, economic output has grown faster in California than in the rest of the United States. One factor underlying this pattern may be the growth of higher-wage jobs in California, which has contributed more to output than to employment growth. This creates relatively few opportunities for low-skilled workers, which may help explain why poverty increased more in California than in most states over the period."
What this means in English, is that California businesses realized it's a buyers market, and hired exclusively "overly productive" workers, paying them bargain basement wages, as a result generating higher then normal economic output, while underqualified workers got the shaft, or extended benefits and disability as the case may be.
More from this profoundly, profound, and taxpayer-funded paper:
Evidence suggests that the reason California has experienced faster economic growth than job growth is that employment has shifted to high-wage industries. Slower job growth, particularly in low-wage industries, is a potentially important problem if it implies fewer opportunities for less-skilled workers.
A related concern is the growth in the poverty rate over this same period. California’s poverty rate adjusted for housing costs grew over five percentage points from 1990 to 2011, the third largest increase among all states (see Neumark and Muz 2013). Even excluding the Great Recession, California’s growth in the poverty rate still ranked 13th highest among states. This rise in poverty is consistent with relative declines in job opportunities for less-skilled workers. California’s relatively high economic growth combined with its relatively low job growth may have disadvantaged less-skilled workers, highlighting a key challenge facing policymakers. That is, the greater economic efficiency that helps spur economic growth sometimes comes at the cost of social equity.
In other words, the SF Fed has caught up not only with common sense, but with the flipside to what our argument from December 2010 implies: that in a world in which temp-workers comprise the bulk of the marginal hiring at the national level for purely optical and political purposes, the economy is doomed to stagnate and generate an ever lower standard of living for the average person.
This is delightful: it means that after a few hundred million more in taxpayer funded research, the Fed will, some time in 2025, realize that QE was counterproductive all along and that it was the Fed whose constantly central-planning, micromanagement interventions were the cause for all that is wrong and broken with the economy. Or something that has been clear to most with a frontal lobe since March of 2009 when the first monetization program was launched in earnest.
We jest of course: there will be no Fed in 2025.