There’s an interesting article over at the Christian Science Monitor you might want to take a gander at. That it supports a point I’ve been making here for some time is purely a coincidence. The author, Gail Tverberg, an actuary interested in energy, notes the close relationship between growth in employment and energy consumption:
Since 1982, the number of people employed in the United States has tended to move in a similar pattern to the amount of energy consumed. When one increases (or decreases), the other tends to increase (or decrease). In numerical terms, R2 = .98. (Click on Figure 2 above.)
I have written recently about the close long-term relationship between energy consumption and economic growth. We know that economic growth is tied to job creation, so it stands to reason that energy consumption would be tied to job growth1 . But I will have to admit that I was surprised by the closeness of the relationship for the period shown.
This close relationship is concerning, because if it holds in the future, it suggests that it will be very difficult to reduce energy consumption without a lot of unemployment. It also would seem to suggest that a shortage of energy supplies (as reflected by high prices) can lead to unemployment.
She looks at the relationship in an interesting way. As oil prices go up faster than wages, as has been the case for many years, a greater proportion of disposable income is used paying for oil which leaves less for everything else.
She goes on to suggest that rapidly rising oil costs resulted in lower real wages for most workers, particularly male workers. One of the great under-reported stories of the last century is how declining real wages forced women into the workplace.
Read the whole thing.