This paper will answer the question of why job growth slows down when unemployment is 16 years low (WSJ: June 3, 2017). The first objective of the paper is to introduce what I call the “direct approach,” to reinforce the hypothesis, (which the author has established in other papers) that the major reason labor productivity declined in recent years in the U.S.- in the long run- was the activities of the redistribution of power and income, which reduced labor mobility. The second objective is to create a new macroeconomics theory by applying the above hypothesis, demonstrating that there are two types of macroeconomics theories: one with an economy with high labor mobility which occurs during a prosperity period (like 1995-2006), and other with an economy with low labor mobility which occurs during a stagnant period (like 2007-2017). The former will be consistent with the currently existing traditional macroeconomics theory. But currently existing traditional macroeconomics will contradict with the reality under the latter as the WSJ published. I have written this article to create a new macroeconomics that highlights the economy with low labor mobility during a stagnant period.
Kim, Paul, "New Macroeconomics" (2017). Economics Papers and Presentations. 14.