New research by economists Martha Olney, at the University of California at Berkeley, and Aaron Pacitti, at Siena College, suggests that the economy is slower to recover jobs today because it has grown far more dependent on people doing things as opposed to making things.
Goods production supplied three-fifths of the economic output in 1950 and about half of the jobs.
What are the flaws to a service-based economy coming out of recession?
There’s relatively little hiring in advance based on expectations of new business, and there’s no positive feedback loop from that hiring. That delays a rebound in jobs, compared with a manufacturing-heavy economy.
Picture by World Bank Photo Collection