Jobs Are Not Scarce

Don's most recent post brings to mind a point with which most of our regular readers will be familiar, but which always bears repeating: The idea that jobs are a scarce resource is a fallacy.

In a world of finite resources and infinite demands, there's no shortage of useful work to be done. This is why the number of jobs correlates so strongly with the size of the labor force; if someone is willing to provide labor, someone else will find a way to utilize it productively, barring third-party interference or unrealistic expectations on the part of the job seeker.

The interesting question is not the quantity of jobs, but their quality--how much they pay, what the working conditions are like, etc. And job quality is largely a function of labor productivity. If a worker is highly productive, his employer can afford to pay him well and maintain good working conditions.

So it's not jobs that are the scarce resource. What's scarce is capital--the equipment and skills necessary to make labor more productive. Any claim that something will "create jobs" without increasing the supply of capital available to enhance labor productivity is to be viewed with great suspicion. Such claims generally rely on a variant of the fallacy of the broken window.

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