James Saft is a Reuters columnist. The opinions expressed are his own.
HUNTSVILLE, Ala. — Technology is limiting U.S. employers’ appetite for both lawyers and big box stores, two excellent reasons to expect monetary policy to remain loose for a long time to come.
In fact the underlying theme, an economy that uses technology to efficiently dispense with labor, raising productivity but forcing many into difficult transitions to new work, may well help to explain why rates were allowed to stay so loose for so long before the crisis broke.
While the U.S. employment report released last Friday was passably strong, the overall picture is of an economy that is going to take a long, long time to return to anything approaching full employment. The drop in the unemployment rate to 8.9 percent looks good at first glance, but the rate is flattered by a drop in labor force participation that is probably itself a marker of weak employment conditions. If the same percentage of the population were in the labor force as before the financial crisis, unemployment would be 12 percent.
To be sure, technology is not the principal reason for the jobs mess — that lies at the feet of the bursting bubble — but there are interesting reasons to think job losses tied to newer technology may be making the recovery that much more difficult.
Of course technology has been destroying old ways of making a living for a very long time — think of blacksmiths and the automobile — and the huge mass of evidence indicates that technological efficiencies are associated with both economic growth and rising demand for labor.