By Steve Cain, RPBG Director
There's more good news on the economic front with the just-released September employment reports. In a nutshell, jobs are up (again) and in a big way; and unemployment is down (again), falling below 6% for the first time since before the recession began.
For the month of September, 248,000 new jobs were added to the economy. The August numbers were also revised upward, to 180,000 from 142,000. As for the flip side of the coin – unemployment fell to 5.9%, the lowest level since July 2008.
The good economic news quickly pushed up stocks. As I write this article, the Dow Jones is within a whisper of 17,000. The markets love the fact that the economy is improving, but the Fed remains cautious about increasing rates, at least in the near-term. For the stock markets, this is the Goldie Locks economy – hot enough to keep going up, but cool enough to keep inflation from being a threat.
So, with all of this good news, why do so many people still feel so negatively about the economy? The answer, it seems, lies in the subtleties of who is actually benefitting from all of this economic improvement. The fact is, a hugely disproportionate share of the economic growth is going to the top 10% of the wage earners on the economic ladder. For the 90% of wage earners not at this highest level, there has been little change in economic condition, at least where real earnings are concerned.
In separate reports this morning on NPR, reporters John Ydstie and Scott Horsley picked apart the numbers and found some truths that may not seem obvious from the big picture. Consider the fact that there are 7.3 million workers who are part-time, but who would like to be working full-time. More importantly, consider the following:
In the 50s, when the economy improved and wages increased, 90% of the workers collected 80% of wage increases. Between 2009 and 2012, more than 100% of wage increases flowed to the top 10% of wage earners! Put differently, the 90% of wage earners below the top 10% actually lost ground in our current economic "recovery."
Not surprising then that there is such widespread discontent with the current state of the economy. The bottom line seems to be that, until the benefits of the economic expansion are felt more broadly, the majority of Americans will continue to feel that the good economic news is, at best, benefitting someone else and, at worst, a cruel joke with little bearing in the real world.
There is still enough slack in the labor market that employers can add workers without having to increase wages. Even as the economy has recovered in recent years, the percentage of adult Americans participating in the labor market has fallen and now hovers just below 63%, compared to 66% or higher before the recession began. Until and unless this changes, most Americans are going to continue to feel left behind in the new 21st Century economy.
So, we can celebrate the continued improvement in the economy. But, for far too many Americans, it remains difficult to find any kind of a personal connection to the good news we keep hearing about.