[Mb-civic] NYTimes.com Article: Working Your Way Down

michael at intrafi.com michael at intrafi.com
Sun Sep 5 10:44:38 PDT 2004

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Working Your Way Down

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

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

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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