Saturday, September 5, 2015
The Labor Day News We Don’t Want to Hear
Here’s the official report: “The nation in August added 173,000 jobs, shy of market expectations. The unemployment rate fell from 5.3 percent to 5.1 percent, the lowest mark since April 2008.” Washington Post, September 4th. Life is good and getting better? Hey, there are other economic signs out there… some good… some not so good. “The U.S. economy has an impressive unemployment rate, but it lacks the wage growth that has historically come at such a level. The number of jobless is quickly falling, but an alarming number of prime-age workers aren’t even hunting for positions. The August jobs number was below the recent monthly average, but growth in the previous two months was revised upward by a combined 44,000 positions.” The Post. Sure it’s about employment numbers. To a point. But it’s also about affordability. The quality of life.
There are other sprinklings of economic news that define our lives. For those who drive, the plunge in gasoline prices has come as an unexpected blessing. For those oil and gas workers, as I have blogged, it has been a disaster of layoffs, shorter hours and tighter work rules. For those who don’t drive because they live in a city where driving isn’t an economical option or live in rural areas where they travel only on work transportation, the fall in the price at the pump is irrelevant.
The explosion of rent costs, particularly in cities, the rise in the cost of foodstuffs – whether due to increased global demand or down and dirty natural disasters – have pushed the quality of life down one giant notch for too many Americans, even harder in the lower half of our economy.
There is a danger in dealing with averages, as I have pointed out before. When you include the massive rises in earning power in the top 5% of our economic world, the United States has made major strides in average per capita income. When you back out those numbers, look at the median or the lower strata, the pattern of economic impairment tells you one severe fact: most Americans continue to see a seemingly never-ending erosion in both their true buying power and their discretionary income (based on that higher cost of living). For the younger set, struggling with the almost $1.3 trillion of aggregate student loan debt, discretionary income has eroded against recent college grads like never before.
The National Employment Law Project trolled government and other available employment data to seek out the kinds of economic pain that those in government like to hide in their presentation of an improving economy for “everyone.” The rising tide is not floating all boats. For too many, precisely the opposite result is now the norm. The resulting report – Occupational Wage Declines since the Great Recession: Low-Wage Occupations See Largest Real Wage Declines – was released on September 2nd and provides that less-than-the-politicians-tell-us scenario.
Here’s part of their abstract: “Private sector employment has expanded steadily, and the jobless rate has continued to fall. Yet, underlying weaknesses persist, as evidenced by the historically low employment rate of prime-age workers and the stubbornly high number of individuals unemployed for longer than six months. The ‘real’ unemployment rate—which includes those working part time who want full-time work, and those who have stopped searching but if offered a job would take it—remains in excess of 10 percent.
“Moreover, most workers have failed to see improvements in their paychecks... In fact, taking into account cost-of-living increases since the recession officially ended in 2009, wages have actually declined for most U.S. workers. Inflation-adjusted or ‘real’ wages reflect workers’ true purchasing power; as real wages decline, so too does the amount of goods and services workers can buy with those wages. The failure of wages to merely keep pace with the cost of living is not a recent phenomenon. The declines in real wages since the Great Recession continue a decades-long trend of wage stagnation for workers in the United States...” The report contains the detailed statistical data to support these conclusions:
The numbers are sobering, a reminder that for most Americans, if they truly understood the magnitude of the problems, there are two massive issues that confront us today: security in an increasingly dangerous and hostile world and a dramatic and continuing downward “reset” in our average standard living. The red herrings of immigration reform and religious freedom make great political soundbites, but they hardly impact our daily lives like the two biggies above. Today’s blog is only about the latter issue, often buried under the mantra of increasing income inequality.
“The past year has been the best for the job market since the end of the recession. Employers have added, on average, 243,000 people to their payrolls each month. That would normally constitute a ‘hot’ job market, said Torsten Slok, chief international economist for Deutsche Bank Securities in New York… ‘When you see all those jobs being added per month, you think, ‘Come on, how can this be bad?,’ ’ Mr. Slok said. ‘But there has been a lot of pain and suffering, and people have been losing their skills or have not been able to re-skill.’… The roots of wage stagnation are deep, according to Mr. Slok.
“Some of it is linked to what he calls the ‘glacial changes’ wrought by macroeconomic forces like automation, demographics and globalization… Other factors are specific to the American economy, including the real estate boom and bust, consumer debt levels and continuing slack in the labor market because of relatively low demand compared with the still-large numbers of people who are looking for work or would return to the labor force if they had a better chance of finding a worthwhile job.” New York Times, September 2nd.
That the tax code clearly favors those who invest over those who earn, even discriminating in favor of those who earn by representing investors (the so-called “carried interest” tax rates), that access to business capital (loans and equity) is cheap and easy for those at the top and almost impossible to get for those in the middle and at the bottom and that the rates of return attributed to productivity increases have moved away from labor and into the hands of the owners of the equipment that generates automated efficiencies… all aggregate to move the earnings gains to those at the top of the economic ladder while slowly eating away at the earning power for the majority of the rest of us.
We’re either going to solve these issues to the betterment of most of us or we are going to continue in our meaningless quest to find scape goats and simplistic slogans to avoid facing the bigger issues necessary to solve the problem. Polarization will only amplify. And in a world where money can buy more influence legally than at any time in our history, it is clear that most of those paying for these new Citizens United-empowered SuperPac ads are completely and totally dedicated to make sure those entitlements at the top stay just the way they are and that Americans continue to obsess about red herrings, ineffective and distorted slogans and scapegoats instead.
I’m Peter Dekom, and history teaches us that a society based on such obsessive falsehoods simply will not survive… that political polarization eventually results in a fracturing of the nation that does not deal with reality.