Job Opportunities Increase When Productivity Goes Up.(ISSUES & INSIGHTS)(VIEWPOINT)

Byline: BRUCE BARTLETT

The slow pace of job creation is clearly the most serious political and economic problem in the country today.

Although Democrats and the press continue to focus on Iraq, President Bush and congressional Republicans know the sluggish economy is a greater threat to their re-election than anything going on in the Middle East.

Unfortunately, there really is not much Congress or the White House can do at this date that will significantly affect the economy before Election Day 2004.

Taxes have already been cut twice, government spending for defense and unemployment compensation is pumping money into the economy, and the Federal Reserve has dropped interest rates to historical lows.

Even if there were something Congress or the White House could do, given the time it takes for policy changes to affect the economy, anything done today would likely not register until after the election.

Ironically, the biggest barrier to job growth is something economists normally applaud: high productivity. In the second quarter of this year, output per hour in the nonfarm business sector was up 6.8%. In 2002, productivity increased 5.4%. These numbers are twice or more than the historical trend.