Republican presidential candidate Jeb Bush and his Democratic rival Hillary Clinton got into an economic spat yesterday via the noblest form of debate: the Twitter argument.
As Bush campaigned in New Hampshire Wednesday, he bemoaned the nation's low labor force participation rate, telling the New Hampshire Union Leader editorial board "that people need to work longer hours" to help propel U.S. growth. The Clinton campaign quickly capitalized on the comment, tweeting:
A few hours later, Bush struck back:
Naturally, the issue is much more nuanced than either candidate is making it out to be. And harder to fit into 140-character dispatches.
Here's the context of Bush's now-infamous quote at the Union Leader editorial board.
"My aspirations for the country, and I believe we can achieve it, is for 4 percent growth as far as the eye can see. Which means we have to be a lot more productive. Workforce participation has to rise from its all-time modern lows. It means that people need to work longer hours and through their productivity gain more income for their families. That's the only way we are going to get out of this rut that we’re in."
While that may make the "longer hours" comment more palatable, a 4 percent growth rate is ambitious to say the least. The last time the nation saw economic growth rates at that level or higher: 2000.
Bush is calculating that the growth rate can be goosed by upping labor force participation, the share of working-age people who are employed or actively looking for a job. In June, the share of Americans in that category was 62.6 percent, the lowest level since 1977. That compares with a peak of 67.3 percent in January 2000.
What's debatable, however, is just how much participation can rise in the future. Much of the decline — about half by some estimates — has been driven by the mass exodus of retiring baby boomers from the labor force. There are also other long-term trends at play, such as more young people choosing not to work when they're in school.
And while there is a significant share of people who were sidelined from work by the recession, it's unclear how many are left waiting in the wings. At 5.3 percent, the unemployment rate is bumping up against the Federal Reserve's estimates for what full employment looks like. The number of discouraged workers — those who say the dearth of job prospects has driven them to give up looking — has been coming down steadily. And jobless claims are trending at levels consistent with a booming economy.
Still, most economists agree there's some amount of slack left. For one, wages have been slow to accelerate out of the 2 percent band they've tracked since the recovery started, which suggest employers aren't yet feeling the pressure to offer fatter paychecks to attract the best talent.
And, as Bush correctly notes (and Democratic-socialist presidential candidate Bernie Sanders agrees), the number of part-time workers is still elevated compared to before the recession. While Americans worked 34.5 hours on average per week in June, right in line with the trend for the two years' worth of Labor Department data that pre-date the recession, there are 6.5 million people in part-time jobs for an economic reason, like having their hours cut or being unable to find full-time work. That compares with an average 4.62 million in the 20 years leading up to the recession.
This is something that others are worried about too, such as Fed Chair Janet Yellen. She's pointed to this measure as one of several signs there's still room for the labor market to improve.
Bush says that's what he meant when he remarked "people need to work longer hours." More people working more hours will boost productivity, he reasons, which will in turn help them make more money. While that may seem like okay logic on the surface, it's more involved than that.
Productivity is measured by how much stuff a worker can churn out for every hour of labor. While it's fluctuated over the years, lately it's been pretty lousy since a decade-long boom ending in about 2004, according to Wells Fargo Securities LLC. So recent productivity trends haven't really looked as rosy as the chart that Clinton tweeted out, which dates to 1948 and ends around 2010. It's also worth noting that it was supplied by the Economic Policy Institute, which is partly funded by labor unions.
In fact, the anemic productivity numbers have economists concerned, including Yellen, who served in President Bill Clinton's administration. High productivity is the key to creating growth that doesn't spur rampant inflation. It boosts living standards for U.S. workers.
But simply having more people work more hours isn't enough to increase productivity. They've got to need to work more hours, for lack of a better word. If employees are working more hours, but there's not a commensurate increase in demand for their goods and services, their output will stay the same. That actually hurts productivity.
Additionally, there are long-lasting factors at work that have pushed down productivity. Companies haven't been investing in new capital like they used to -- equipment that could help their workers do their jobs more efficiently. Some economists think the heydays of productivity are long gone because new technology has become less revolutionary. It's what they call "secular stagnation."
So in summary, both Clinton and Bush left out really important details in this debate, cherry-picking data points that support their agenda. But I suppose we shouldn't be that surprised. That's politics, after all.