The other day I tweeted this:
Is the Australian labour market today in worse shape than it was during the Great Depression? There were about half a million unemployed people in 1932, at the height of the Depression, but around 730 000 unemployed in January this year. The second number is certainly larger than the first number, so does that mean we’re in sub-Depression territory? Of course it doesn’t. The population is about 4 times larger than it was back then and the labour force is about 4.7 times bigger, so comparing the number of unemployed people today and in 1932 doesn’t really tell you much about the relative health of today’s labour market. There’s a reason why people look at the unemployment rate rather than the number of unemployed people when they want to make comparisons over time.
This was the front page of our national broadsheet the day after the ALP Government announced a plan to increase the tax on the super contributions of the 128 000 Australians earning over $300 000:
Three types of blog posts I’m sick of writing, and I’m sure you’re sick of reading, are generic defences of the Fair Work Act, angry screeds against predictable partisanship from The Australian, and basic summaries of labour force data. Yet every time I swear to myself that I’m going to take a break from each of these genres, someone writes something that gets me sufficiently riled up that I feel compelled to respond. John Black’s piece in yesterday’s Oz, titled ‘Workers at the mercy of a jittery economy‘, ticked all the boxes. He uses a highly selective and skewed bundle of labour force data to try to make the case that the Fair Work Act is the cause of rising unemployment. Here’s my response.
They don’t make wages breakouts like they used to. A few years ago, the much-discussed, never-quite-seen phenomenon apparently amounted to an “economically irrational assault on a scale we have not witnessed for a quarter of a century”. Everywhere you looked, there were harbingers of its imminent arrival – the breakout would be summoned into being by the right to strike, the NBN, or by wage rises in the transport industry or community services. Now the wages breakout seems to amount to a couple of Taragos full of tradies on the North-West shelf.
The campaign by The Australian newspaper against the Fair Work Act has had a few phases. I’d like to go through a few of their key claims and evaluate them against recent data.
How would we know if the labour market was ‘flexible’? One way is to look at how the jobs market responds to economic shocks. During the GFC, when the Howard Government’s labour laws were still in effect, the number of hours worked in Australia fell while the number of people in employment didn’t fall.
My last post consisted of the sort of Sisyphean snark about The Australian that I’d like to cut back on, but can’t resist writing. I was a little taken aback that the same paper that labelled a modest trim to family payments for high-income households as ‘class warfare’ would unashamedly lament that “the old principle that welfare should exist only for those who genuinely need it appears no longer to hold.”