Dear Commons Community,
The New York Times editorial today focuses on the major weakness in the American economy. Even while the stock market is at an all-time high and jobs are expanding, the fundamental problem in the economy is that wages are stagnant and working people are struggling to make ends meet. Wages have not kept up with inflation for several years running. In addition, most of the new jobs reported yesterday indicate that nearly all of the private-sector job gains were in restaurants, retail stores, temporary work, health care and other low-to-moderate-paying fields.
In sum, the economy is not working for those who rely on paychecks. It is working well for those who rely on stock dividends and capital gains.
Below is a reprint of the editorial which says it all.
Job Growth, but No Raises
New York Times Editorial
November 8, 2014
The employment report for October, released on Friday, reflects a steady-as-she-goes economy. And that is a problem, because for most Americans, more of the same is not good enough. Since the recovery began in mid-2009, inflation-adjusted figures show that the economy has grown by 12 percent; corporate profits, by 46 percent; and the broad stock market, by 92 percent. Median household income has contracted by 3 percent.
Against that backdrop, the economic challenge is to reshape the economy in ways that allow a fair share of economic growth to flow into worker pay. The October report offers scant evidence that this challenge is being met. Worse, the legislative agenda of the new Republican congressional majority, including corporate tax cuts and more deficit reduction, would reinforce rather than reverse the lopsided status quo.
The economy added 214,000 jobs last month, in line with its performance over the past year. Consistent growth is certainly better than backsliding, but growth is still too slow: At the current pace, it will take until March 2018 for employment to return to its pre-recession level of health.
Even then, more jobs would not necessarily mean higher pay. Updated figures by the National Employment Law Project, a labor-advocacy group, show that about 40 percent of the private-sector jobs created in the last five years have paid hourly wages of $9.50 to $13, and 25 percent have paid between $13 and $20. Those findings are underscored by the new jobs report, which shows that nearly all of the private-sector job gains were in restaurants, retail stores, temporary work, health care and other low-to-moderate-paying fields.
Wages have barely kept up with inflation for several years running, and there are no economic or political forces to push them up. Working people can make more when employers bump up hours, which in October averaged a post-recession high of 34.6 hours a week. Workers also will see their paychecks go further as gas prices fall. But they are not getting ahead in any real sense.
None of this was inevitable. When the private sector is unable or unwilling to create good jobs at good pay, government is supposed to use stimulus to spur employment. It is also the job of government to enact and enforce polices like robust minimum wages and legal protections for union organizing. But the 2009 stimulus, too small to begin with, was offset by federal spending cuts beginning in 2011, while job-enhancing policies have gone nowhere, in large part because of Republican opposition.
Other forces that undermine broad prosperity bear examination. Trade with nations that manipulate their currency, exploit workers and damage the environment to gain unfair advantages costs Americans jobs. An outsized financial sector feeds bubbles and busts that devastate employment. Republican leaders have identified new trade deals and less financial regulation as priorities, but a heedless push on those fronts ignores the negative job-related consequences.
The economy is not working for those who rely on paychecks to make a living, which is to say, almost everyone. Steady gains in the October jobs report, while welcome, do not change that basic fact. Nor will policies currently on the horizon.