Economic Recovery Still Not Reaching Working People

by James Parks, Sep 1, 2006

The nation’s unemployment rate remained essentially the same last month, indicating once again the economy is not creating enough jobs to meet the increase in the workforce—another sign that the economic “recovery” is not reaching working people.

Since 2004, the economy has been growing at a healthy clip, the unemployment rate is low and productivity growth has accelerated from the already elevated levels of the late 1990s. But very little of the resulting prosperity is finding its way into the pockets of America’s workers.

Income and wages are not keeping up with inflation, the household debt burden is growing, health insurance coverage continues to decline and poverty rates remain higher than before the last recession. Wages and salaries now account for the smallest percentage of our gross domestic product on record, while corporate profits are at their highest level since the 1960s.

The 128,000 new jobs added last month was slightly higher than the total in July, but 6,000 less than in June. The Economic Policy Institute (EPI) reported last month there are only 1.9 percent more jobs today in the United States than in March 2001 (the start of the last recession). Private-sector jobs are up only 1.5 percent. If the employment rate had returned to pre-recession levels, nearly 4 million more people would be employed.

As America’s workers head into the long Labor Day weekend, the latest jobless figures underscore the lousy state of the nation’s economy. In the latest edition of its biannual State of Working America 2006–2007, EPI says the five-year-old economic expansion that began in late 2001 has resulted in faster productivity growth—but the workers who are producing more are not being paid more.

In fact, real income is lower for the typical family than in 2000, while the incomes of the wealthiest families have grown rapidly. The full report will be released tomorrow, but EPI released portions of some chapters last month.

The State of Working America backs up comments by AFL-CIO President John Sweeney at the AFL-CIO Labor Day news briefing Wednesday:

A few weeks ago in a meeting with the media, President Bush said our economy is “solid and strong” and “creating real benefits for America’s workers and families.” Apparently the President should get out more. Workers …tell us they’re struggling harder than ever—they’re not seeing “real benefits”—they’re seeing real decline and real struggle.

Consider these examples from the EPI report:

• Inequality in the United States is on the rise. The richest 1 percent of the nation, on average, owns 190 times as much as a typical household.
• Employers are shifting health insurance costs onto workers. Not only are fewer employees receiving health insurance through their employers, but those who still do are paying more for it. Some 55.9 percent of employees received insurance through their jobs in 2004, down from 61.5 percent in 1989. The costs to employees are also rising. In 1992 employees paid 14 percent of the cost of premiums and last year they paid 22.1 percent and that doesn’t even include the higher deductibles or co-pays most employees have to pay.
• The government has done little to end poverty. The child poverty rate in the United States is the highest of 16 other industrialized nations.

Where has the money gone? Into profits and CEOs’ pockets. EPI reports that today’s average CEO earns more before lunch in one day than the average minimum wage worker earns all year. In fact, the average CEO is paid in just one workday what the average worker spends almost 10 months (260 work days) working to earn.

Working people are tired of these glaring disparities and are revved up to make change. According to a recent poll by Peter D. Hart Research Associates for the AFL-CIO, more than half (55 percent) of voters say they are dissatisfied with the economic situation and a whopping 82 percent say they are concerned about the economic future of the next generation.

To make sure these economic issues stay in the forefront of the 2006 elections and that workers’ voices are heard, the AFL-CIO will run the largest-ever off-year political mobilization.

In his column on the AFL-CIO website, Sweeney says:

Economic reality and the anti-worker drive created by the Bush administration and Republican congressional leaders are fueling working families’ political energy this year. America’s working families deserve better, and we’re putting our blood, sweat, tears and action into winning it.

Political observers say the economy will be a big issue in the 2006 elections, one that creates a change in leadership in Congress. Here’s what Charles Cook, a Washington, D.C.-based political analyst, told The New York Times:

There are two economies out there. One has been just white hot, going great guns. Those are the people who have benefited from globalization, technology, greater productivity and higher corporate earnings.

And then there’s the working stiffs who just don’t feel like they’re getting ahead despite the fact that they’re working very hard. And there are a lot more people in that group than the other group.

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