In this post, the Curmudgeon will get down to brass tacks. Many of his detractors claim that supply-side economics (which they call "trickle-down" economics) does not work. Of course, they are wrong. The reason they are wrong is that they miss the point that supply-side economics only provides "trickle-down" benefits to those willing to work for them. They would prefer a Keynesian world of "hand-me-down" economics, where the government gives them everything they need (or, more accurately, want). But, as President Gerald Ford wisely said, if the government is big enough to give you everything you want, it is big enough to take away everything you have.
There is no better real-world illustration of the contrast between supply-side and Keynesian economics than today's labor market. One couldn't write a better textbook case study. In fact, the Curmudgeon will present this illustration using just two graphs of recent labor market data.
The first graph below is the JOLTS Index, which measures total non-farm job openings. The most recent data point is as of April 2021. That number is an all-time record, smashing all previous records, as what Larry Kudlow calls the "Reopening Vaccinated Trumpian Super-V Recovery" has resulted in a massive wave of business re-openings, and even new openings, as Americans who suffered through more than a year of unnecessary shut-downs are yearning to once again be free, and are dining out, shopping, traveling ... living.
Now, one could perhaps surmise from this that businesses are just re-opening so fast that there simply aren't enough available warm bodies to fill the available jobs. Anecdotally, anyone who dines out has seen the ubiquitous help wanted signs. You've probably even seen signs, as I have, noting that hours and/or seating is limited due to a lack of staff. Yes, these same small businesses who suffered under unnecessary and unconstitutional government closures of their businesses and restrictions on their seating capacity are now facing the same conditions due to a lack of workers.
Why? Did that many people die during the pandemic? Well, given that the trend level of the JOLTS Index was about 7 million prior to the pandemic, and the most recent reading tops 9 million, I hardly think that 2 million worker gap lines up with the 600,000 or so American lives lost to the virus - especially since more than half those lives lost were over the age of 75, so they probably wouldn't be working anyway. In fact, 78% were over the age of 65.
Is it just that population growth has failed to keep up with economic growth? Well, that wouldn't line up with consumption data, and we've seen no signs of that previously. But to rule that out definitively, let's look at the second graph.
The graph below shows Continued Claims for Unemployment Benefits. As the Curmudgeon explained early in the pandemic, when the media insisted on misrepresenting the cumulative total of weekly initial claims as the total number of people unemployed at any given time, Continued Claims does, in fact, represent just that: the number of people who are still filing for benefits in a given week. As an economy recovers, that number should fall, as more and more displaced workers fall off the unemployment insurance rolls and go back to work, especially if job openings are abundant -
Unless ... the government, in its unending and limitless stupidity, has provided enhanced unemployment benefits, and has stubbornly failed to withdraw those enhancements even as the economy has fully recovered, providing people with a disincentive to work. Don't believe that's what's happening? Check out the graph, and do the math.
The trend level of Continued Claims, prior to the pandemic, was about 1.7 million, during the strongest labor market in most of our lifetimes, thanks to low taxes, deregulation ... but I digress. Note that the recent trend has been dead-flat since March. Why? Re-read the previous paragraph.
Now, look at what the recent trend level is. About 3.8 million. What's the difference between that and the pre-pandemic trend level? Unless my math is wrong, it's just over 2 million.
And - what was the difference between the trend level of job openings pre-pandemic, and the April 2021 record?
I'll let you take it from here.
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