[OPE] Limits of lean production in the US?

The issue is whether the reduction of the airlines workforce is mainly due
to online ticketing. I think not. I don't think that online ticketing could
reduce the workforce that much.

I wrote about this in 2005
http://archives.econ.utah.edu/archives/a-list/2005w46/msg00029.htm The stats
are here:
http://www.bts.gov/press_releases/2010/bts045_10/html/bts045_10.html

If the airlines process more passengers flying more miles with less staff,
the question then is

- whether this means an increase in labour intensity,
- whether new technologies have made work processes more efficient, so that
less staff is required,
- whether the airlines have simply outsourced a packet of services to other
companies, so that they do not appear anymore in their own books.

This is I think not a philosophical issue about "levels of abstraction", but
an empirical question... but I haven't got a good answer to it yet.

Justin does admit that "if the economy doesn't continue to grow, companies
will have no impetus to hire, no matter how lean they are." That is correct,
but if employers find that they can get the work done with 10-20% or so less
staff, they are less likely to hire more people anyway, that's the point.
The passanger turnover had declined somewhat recently.

My own forecast is that US unemployment will remain durably higher, i.e. it
is unlikely to fall below an official 8% of the labour force in the medium
term, and that final demand growth will remain very sluggish for years. As I
suggested in my RRPE piece, that means that the NAIRU is likely to rise. My
previous forecast of 10% official US unemployment was broadly correct, it
was actually reached in the last quarter of 2009, although it has reduced
somewhat since then. But I don't think it is likely to go below 8%. The U6
is at 11% and the U7 is at 16.7% which is to say one in six US workers
cannot get paid employment or sufficient paid employment. The official
poverty rate is rising to one in six of the total population.

US payroll employment started to grow again in the first half of 2010, but
is now faling again, which is to say that the upturn is rather anaemic. If
price inflation is low, that is because people aren't buying more, but less.
In the longer term that could change, for example if the price of imported
goods rises. If prices rise, despite lacklustre final demand growth, this
strains debt levels. But I think increasingly we will find that some
categories of goods and services rise in price, but others will not or
decline. In that case, the aggregate CPI will not tell us all that much
anymore.

Jurriaan

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Received on Tue Sep 21 16:02:20 2010