New York Times
Published: September 5, 2004
As they so often do, economic
reality and political expediency parted ways with the release of August's
employment report on Friday. The reality is that unless
Nothing, perhaps, except the actual state of the job market. The United States gained 144,000 jobs last month, which is just barely enough to keep up with the number of people entering the work force. True, the job numbers for June and July were revised upward, but they were still weak, and much lower than August's. There was a tiny reduction in the unemployment rate - because the work force became smaller, not because of job creation. Eight million people were unemployed in August, all told, the same as in the month before.
Dig beyond the numbers, and the situation is even worse. Even with a slight acceleration in August, average hourly wages for the month are not likely to keep up with inflation (that number comes out in mid-September). As has been the case throughout the current economic recovery, wages are held down by the slow pace of job creation and, to a lesser extent, by the mainly service-oriented jobs available.
With ordinary Americans' wages eaten up by inflation and their debt at nosebleed heights, consumer spending - which accounts for two-thirds of economic activity - will not be able to g et the economy humming. July's summer sales on cars accounted for virtually all of that month's big-ticket spending - most of it on credit. Already, economic growth in the second quarter has been revised downward a bit and consumer confidence registered an unexpectedly steep decline in August.
All of this makes Mr. Bush's assertion in his acceptance speech at the convention last week that what workers and the economy really need most is some new tax-sheltered savings accounts seem seriously beside the point.
Mr. Bush's preferred explanation is that workers' problems are just part of the normal business cycle, in which employment typically rises after corporations get enough money to make investments, and wages rise after corporations are satisfied with their profits. That means the problem will be self-correcting, justifying Mr. Bush's lack of economic policy prescriptions.
But this recovery is now nearly three years old, and employment and wages are not so much trailing business success a s diverging from it. A new study of recent Commerce Department data by the Center on Budget and Policy Priorities confirms that wage and salary growth has been exceptionally poor, while profits have been unusually robust.
Mr. Bush tends to attribute the unevenness of the economic recovery to the shocks that were already developing before his election (the stock market meltdown and corporate scandals) and those beyond his control (the 9/11 terrorist attacks). But this is the first time in more than 50 years that workers have for so long and so deeply failed to share in the benefits of growth.
Mr. Bush owes it to voters to look beyond the
business cycle and his tax cuts and offer a way out of this economic