Productivity used to be pro-cyclical, said CoreLogic ($17.52 0%) Chief Economist Mark Fleming during a presentation at REO Expo last week.
If you were laid off from a production line, you didn’t go job-hunting. You waited by the phone until the factory called again when demand returned, he said. This, in economist speak, is called a “quasi-fixed factor,” Fleming explained.
But today, labor has changed. We don’t make as much stuff. And our job creation doesn’t rebound with demand, he said. Labor is more flexible. Employers can more easily substitute capital for headcount. This throws off the balance so fundamental to a guy named Arthur Melvin Okun.