A shift in U.S. employment over the past two years to higher-wage and more productive sectors, as well as longer average working hours, should lead to further increases in labor productivity, two leading Treasury Department economists said Friday.
In an analysis released Friday, Assistant Secretary for Economic Policy Ben Harris and Assistant Secretary for Macroeconomics Tara Sinclair said the U.S. recovery from the COVID-19 pandemic has increased employment “the fastest” since recent recessions.
They said the recovery in the U.S. labor market has been “exceptionally strong” and that the U.S. economy is now 5% larger than it was before the pandemic began, and that core inflation is lower than in many major advanced economies.
“While we recognize that other advanced economies have faced other economic shocks — in particular, our European partners have been hit hardest by Russia’s war against Ukraine — the data show that the U.S. economic recovery has been very strong,” Harris and Sinclair wrote. A post on the website of the Ministry of Finance.
The announcement came just hours after the Labor Department reported that the U.S. unemployment rate was 3.6% in February, with fewer sectors hiring and stronger-than-expected wage growth.
Harris and Sinclair did not elaborate on the new data, but during the first phase of the pandemic, there were significant differences in employment figures between the Group of Seven economies, largely due to differences in how those economies hired workers and supported firms during the shutdown.
In the United States and Canada, unemployment insurance is best suited for quick, large-scale support. Meanwhile, many European economies used social safety nets, which often led to continued employment in official statistics.
Despite differences in initial response, employment rates are now low in G7 countries, they said.
But labor productivity growth in the U.S. was greater than in Europe and Japan, perhaps because the U.S. unemployment insurance system allowed more labor mobility than employer-linked systems.
“In general, U.S. employment has shifted from low-wage occupations to higher-wage, high-productivity occupations. U.S. employment has also shifted to sectors with higher average hours worked, indicating a strong recovery in hours relative to employment. This redistribution of labor may lead to further increases in labor productivity in the future,” the researchers said. reported.
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