Thursday, September 01, 2005


As Hightower Says: A Boom -- For Whom?

Last week, Paul Krugman discussed why that, despite the constant media pronouncements that America is no longer in a recession, the majority of the American people aren't exactly with the way things are going. (Shorter version: Don't take a leak on my head and tell me it's raining.)

American families don't care about G.D.P. They care about whether jobs are available, how much those jobs pay and how that pay compares with the cost of living. And recent G.D.P. growth has failed to produce exceptional gains in employment, while wages for most workers haven't kept up with inflation. About employment: it's true that the economy finally started adding jobs two years ago. But although many people say "four million jobs in the last two years" reverently, as if it were an amazing achievement, it's actually a rise of about 3 percent, not much faster than the growth of the working-age population over the same period. And recent job growth would have been considered subpar in the past: employment grew more slowly during the best two years of the Bush administration than in any two years during the Clinton administration. It's also true that the unemployment rate looks fairly low by historical standards. But other measures of the job situation, like the average of weekly hours worked (which remains low), and the average duration of unemployment (which remains high), suggest that the demand for labor is still weak compared with the supply. Employers certainly aren't having trouble finding workers. When Wal-Mart announced that it was hiring at a new store in Northern California, where the unemployment rate is close to the national average, about 11,000 people showed up to apply for 400 jobs. [...] You may ask where economic growth is going, if it isn't showing up in wages. That's easy to answer: it's going to corporate profits, to rising health care costs and to a surge in the salaries and other compensation of executives. (Forbes reports that the combined compensation of the chief executives of America's 500 largest companies rose 54 percent last year.)
And he's backed up by new statistics from the Center for Budget and Policy Priorities:
August 30, 2005 ECONOMIC RECOVERY FAILED TO BENEFIT MUCH OF THE POPULATION IN 2004 Despite the fact that 2004 represented the third full year of economic recovery, the Census data released today show that poverty increased again last year and median income failed to rise. The new data are particularly troubling for workers, showing backward movement for American workers on several fronts[1]: Real median earnings of full-time year-round male workers fell by nearly $1,000 (from $41,761 to $40,798), a decline of 2.3 percent. Real median earnings of full-time year-round female workers fell by over $300, or 1 percent (from $31,550 to $31,223), marking the second consecutive year of decline. This is the first time since 1995 that the median earnings of full-time year-round female workers have dropped for two years in a row. Real median income among the working-age population — households headed by adults under 65 — fell by $600 (from $51,559 to $50,923), a decline of 1.2 percent. (Overall median income for all households was unchanged.) The number of people who work but live in poverty increased by 563,000. The poverty rate increased among this group from 5.8 percent to 6.1 percent. Among people age 18 to 64 who work, the number who were uninsured climbed by 772,000, and the percentage without insurance rose from 18.6 percent to 19.0 percent. The percentage of people with employer-based health insurance coverage fell below 60 percent — to 59.8 percent — for the first time since 1993. The data show that the current recovery has been slow to help low- and middle-income families. Four million more people were poor in 2004 than in 2001, when the economy hit bottom, and 4.6 million more were uninsured. This three-year poverty trend is worse than in all previous recoveries over the last 45 years, except for downturn of the early 1990s.[2] Median income is about equal to its level in 2001, but remains significantly below pre-recession levels. Income growth between 2001 and 2004 was slower than during all previous recessions over the last 45 years, again with the exception of the downturn of the early 1990s. In short, the Census data provide new evidence that, as in 2002 and 2003, the recovery in 2004 was neither robust nor broad-based. Developments in early 2005 point toward continued problems, with real wages failing to improve according to the data currently available.
In other words: Don't pee on my head and tell me it's raining. Or, to quote Jim Hightower: A boom -- for whom?

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