If Business Confidence Explained Lack of Hiring, Then Hours Per Worker Would Be Increasing

Business people always want more money.  That is part of being in business.  (Has Goldman Sachs or General Electric ever said they want lower profits?)  This means that their spokespeople can be counted on to complain about taxes, regulations, wages, or anything else that costs them money.  Sometimes what they say is not true.

This can be clearly seen with current complaints that fears about regulation and higher taxes are discouraging hiring.  This claim can be easily tested.  If firms are in a situation where they would be hiring, except for these fears, then we should be seeing an increase in the average number of hours per worker.  We are not seeing an increase in hours worked that is at all out of line with prior recoveries.  In fact, in the June data, hours worked fell.

Reporters should examine whether the claims of business people are plausible instead of just repeating them.

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR).  He is the author of False Profits: Recovering from the Bubble Economy.  He also has a blog Beat the Press, where he discusses the media’s coverage of economic issues.  This article was first published by CEPR on 21 July 2010 under a Creative Commons license.

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