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How Are Jobs Connected to Economic Growth?
Growth comes first, then more jobs, and then, as higher incomes translate into consumption, more growth… and then more jobs… and then more growth… until the next recession.
A few days ago I got into a Twitter discussion with The Guardian’s United States finance and economics editor, Heidi Moore, about inequality and growth. My main point was that inequality hurt growth by preventing the economy from allocating opportunities to the people best able to exploit them; rich stupid people would get more chances than poor smart ones. But as I was making that point, this happened:
I was a little surprised by this exchange. In the past few years, you didn’t have to look far to find some very smart people talking about how much economic growth is needed to create jobs. Others spoke about a “jobless recovery”, where growth happened without any increase in employment. And yet here was another very smart person saying that they all had it backwards – jobs created growth, and not the other way around.
The fact is that it can go both ways, and the cycle can be self-reinforcing. Heidi’s view was that jobs provided people with income, income begat consumption, and higher consumption (as a component of gross domestic product) meant growth. She’s not wrong – at least in principle – but growth can create jobs as well.
For example, let’s say that real interest rates suddenly fell; credit was easier to obtain, and saving became a less attractive proposition. Americans might decide to spend more of their wealth. Providing Americans weren’t just buying imports, the extra demand for goods and services might spur American firms to hire more people.
It wouldn’t have to happen right away, though. At first, companies might simply ask their existing workers to put in more hours or effort. With more labor going into the production process, the economy could still grow without adding jobs. Eventually, if the rise in consumption were sustained, people might get tired of working overtime; then companies would have to hire more. But economic growth would have preceded the uptick in employment.
This is just one example. Increased demand for goods and services can come from greater government spending, more purchases of American exports, or even private investment in a new industry. Regardless of the impetus, companies don’t always hire right away. Growth often comes first, and then, once it continues for a while, firms finally make the decision to hire.
Looking at some data confirms this story (note that the growth rates in this chart aren’t annualized like the ones in news headlines):
In the past several recessions, economic growth has returned before employment; the blue area has become positive before the red area. But even if jobs don't restart growth, could lower employment cause a recession, as Heidi suggested? It doesn't seem to be the case here. Jobs and real gross domestic product fall at about the same time going into each downturn.
There may be other time periods and countries where this is not the case, but the evidence for the United States is pretty clear. Growth comes first, then more jobs, and then, as higher incomes translate into consumption, more growth...and then more jobs...and then more growth...until the next recession.
A Mercury-bound spacecraft's noisy flyby of our home planet.
- There is no sound in space, but if there was, this is what it might sound like passing by Earth.
- A spacecraft bound for Mercury recorded data while swinging around our planet, and that data was converted into sound.
- Yes, in space no one can hear you scream, but this is still some chill stuff.
First off, let's be clear what we mean by "hear" here. (Here, here!)
Sound, as we know it, requires air. What our ears capture is actually oscillating waves of fluctuating air pressure. Cilia, fibers in our ears, respond to these fluctuations by firing off corresponding clusters of tones at different pitches to our brains. This is what we perceive as sound.
All of which is to say, sound requires air, and space is notoriously void of that. So, in terms of human-perceivable sound, it's silent out there. Nonetheless, there can be cyclical events in space — such as oscillating values in streams of captured data — that can be mapped to pitches, and thus made audible.
Image source: European Space Agency
The European Space Agency's BepiColombo spacecraft took off from Kourou, French Guyana on October 20, 2019, on its way to Mercury. To reduce its speed for the proper trajectory to Mercury, BepiColombo executed a "gravity-assist flyby," slinging itself around the Earth before leaving home. Over the course of its 34-minute flyby, its two data recorders captured five data sets that Italy's National Institute for Astrophysics (INAF) enhanced and converted into sound waves.
Into and out of Earth's shadow
In April, BepiColombo began its closest approach to Earth, ranging from 256,393 kilometers (159,315 miles) to 129,488 kilometers (80,460 miles) away. The audio above starts as BepiColombo begins to sneak into the Earth's shadow facing away from the sun.
The data was captured by BepiColombo's Italian Spring Accelerometer (ISA) instrument. Says Carmelo Magnafico of the ISA team, "When the spacecraft enters the shadow and the force of the Sun disappears, we can hear a slight vibration. The solar panels, previously flexed by the Sun, then find a new balance. Upon exiting the shadow, we can hear the effect again."
In addition to making for some cool sounds, the phenomenon allowed the ISA team to confirm just how sensitive their instrument is. "This is an extraordinary situation," says Carmelo. "Since we started the cruise, we have only been in direct sunshine, so we did not have the possibility to check effectively whether our instrument is measuring the variations of the force of the sunlight."
When the craft arrives at Mercury, the ISA will be tasked with studying the planets gravity.
The second clip is derived from data captured by BepiColombo's MPO-MAG magnetometer, AKA MERMAG, as the craft traveled through Earth's magnetosphere, the area surrounding the planet that's determined by the its magnetic field.
BepiColombo eventually entered the hellish mangentosheath, the region battered by cosmic plasma from the sun before the craft passed into the relatively peaceful magentopause that marks the transition between the magnetosphere and Earth's own magnetic field.
MERMAG will map Mercury's magnetosphere, as well as the magnetic state of the planet's interior. As a secondary objective, it will assess the interaction of the solar wind, Mercury's magnetic field, and the planet, analyzing the dynamics of the magnetosphere and its interaction with Mercury.
Recording session over, BepiColombo is now slipping through space silently with its arrival at Mercury planned for 2025.
Erin Meyer explains the keeper test and how it can make or break a team.
- There are numerous strategies for building and maintaining a high-performing team, but unfortunately they are not plug-and-play. What works for some companies will not necessarily work for others. Erin Meyer, co-author of No Rules Rules: Netflix and the Culture of Reinvention, shares one alternative employed by one of the largest tech and media services companies in the world.
- Instead of the 'Rank and Yank' method once used by GE, Meyer explains how Netflix managers use the 'keeper test' to determine if employees are crucial pieces of the larger team and are worth fighting to keep.
- "An individual performance problem is a systemic problem that impacts the entire team," she says. This is a valuable lesson that could determine whether the team fails or whether an organization advances to the next level.