Why Doesn't Job Growth Increase Output?
With the unemployment rate at its lowest level since 2008, economists are right to wonder why 56 consecutive months of job gains haven't led to a bigger boom in America's GDP. The country's output grew at 3.5% in Q3, down from 4.6% in the spring. The Wall Street Journal's Eric Morath has an easy explanation for the dissonance: the sectors hiring the most people—especially retail and hospitality—simply don't contribute much to the economy.
The retail sector, for example, accounted for 11.1% of new hires in Q2, but just 5.8% of output. Leisure and hospitality's numbers were even more out of whack, with the field comprising 10.5% of hiring and 3.8% of GDP. Compared that to finance, which despite a reluctance to return to pre-crash hiring levels—the industry accounted for 5.7% of hiring—makes up 20.1% of output.
