Working Your Way Down
Editorial
The New York Times
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 President Bush pulls nearly one million
jobs out of a hat in the next four months, he will indeed become the first
president since Herbert Hoover to preside over a decline in employment
in a single term in the White House. But Mr. Bush is determined to act as
if nothing bad is happening on, as he likes to put it, "my watch."
And so in his first appearance after the Republican National Convention - in a
corner of the sliver of undecided America - he declared that the numbers
showed that the economy is "spreading prosperity and opportunity and
nothing will hold us back."
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 get 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 as 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 sluggishness. Senator John Kerry
would likewise do voters a favor by focusing the contest on ideas
that might alter the status quo. No one is served by the current low level of the
economic debate.
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