Tuesday, June 29, 2004

Today’s economy doesn’t feel like a recovery for most Americans

Why you’re right:

1. The jobs being created are lower quality than those being lost. A widely cited CIBC World Markets report found that higher wage industries such as manufacturing, transportation, and natural resources are shedding jobs. Since the current economic expansion began in 2001, the total number of jobs in higher wage sectors has decreased by 2%, while the number in lower wage sectors has increased by 1.2% Meanwhile, more of the employed are working part-time or working for themselves. The study concludes that, given these changes, “it will take 20% more jobs than in the last extension to generate the same salary gain.” (PR Newswire)

2. Real wages are still shrinking. Although weekly wages appeared to grow .3% in the month of May, adjusting for inflation yields a wage decline of .4% in May, and.5% during the last year. On average, then, it has become more difficult for people to afford goods and services. (Washington Post)

3. Healthcare costs are rising. Annual employer-based health insurance premiums have risen 37% for individuals and 41% for families since 2000. Out-of-pocket costs associated with these plans are up 52% for individuals and 49% for families during the same period. Almost 20% of household personal income now goes towards healthcare costs. (Kaiser Family Foundation, Urban Institute)

Why they’re wrong:

Cheerleaders of the recovery stress the recent positive trend in job creation as evidence that economic prosperity is returning to Americans across the socioeconomic spectrum. But neither the unemployment rate nor the number of “discouraged workers” who have given up on the job search is falling. Employment and wages are the foundation of long-term economic health, and, until these numbers improve meaningfully, the recovery will continue to be incomplete.