The shift in U.S. employment over the past two years toward industries with higher wages and higher productivity, and longer average hours worked, could lead to further productivity gains labor in the future, two top Treasury Department economists said Friday.
In an analysis released on Friday, Ben Harris, assistant secretary for economic policy, and Tara Sinclair, assistant secretary for macroeconomics, said the job recovery in the United States following the COVID-19 pandemic had been “much faster” than after recent recessions.
They added that the US labor market recovery had been “exceptionally strong”, that the US economy was now more than 5% larger than before the start of the pandemic and that core inflation was weaker than in many major advanced economies.
“While acknowledging that other advanced economies have faced different economic shocks – notably, our European partners have been hit harder by Russia’s war on Ukraine – evidence shows that the US economic recovery has been very strong,” Mr. Harris and Mr. Sinclair wrote in a post on the Treasury Department’s website.
The release came hours after the Labor Department reported a slight rise in the U.S. unemployment rate to 3.6% in February, and higher-than-average wage increases. expected, with hiring concentrated in a smaller number of business sectors.
Harris and Sinclair did not address the new data, but noted significant differences in employment statistics between the Group of Seven economies during the first phase of the pandemic, mainly due to differences in the way whose savings have supported workers and businesses during the shutdowns.
In the United States and Canada, unemployment insurance was best suited for rapid and large-scale support. At the same time, many European economies have exploited social safety nets, often in ways that have kept employment in official statistics.
Despite the differences in the initial response, employment rates are now low in all G7 countries, they said.
But U.S. labor productivity growth has outpaced that of Europe and Japan, perhaps because the U.S. unemployment insurance system allows for greater labor mobility relative to systems that preserve attachment to the employer.
“In general, US employment has shifted from low-wage industries to high-wage, high-productivity industries. US employment has also shifted to industries where the average number of hours worked is higher. high, implying a stronger recovery in hours relative to employment. This reallocation of labor could lead to further productivity gains in the future,” they said.
