Job Growth, but No Raises

By NY Times THE EDITORIAL BOARD NOV. 7, 2014
The employment report for October, released on Friday, reflects a steady-as-shegoes
economy. And that is a problem, because for most Americans, more of the
same is not good enough. Since the recovery began in mid-2009, inflationadjusted
figures show that the economy has grown by 12 percent; corporate
profits, by 46 percent; and the broad stock market, by 92 percent. Median
household income has contracted by 3 percent.
Against that backdrop, the economic challenge is to reshape the economy in
ways that allow a fair share of economic growth to flow into worker pay. The
October report offers scant evidence that this challenge is being met. Worse, the
legislative agenda of the new Republican congressional majority, including
corporate tax cuts and more deficit reduction, would reinforce rather than reverse
the lopsided status quo.
The economy added 214,000 jobs last month, in line with its performance
over the past year. Consistent growth is certainly better than backsliding, but
growth is still too slow: At the current pace, it will take until March 2018 for
employment to return to its pre-recession level of health.
Even then, more jobs would not necessarily mean higher pay. Updated figures
by the National Employment Law Project, a labor-advocacy group, show that
about 40 percent of the private-sector jobs created in the last five years have paid
hourly wages of $9.50 to $13, and 25 percent have paid between $13 and $20.
Those findings are underscored by the new jobs report, which shows that nearly all
of the private-sector job gains were in restaurants, retail stores, temporary work,
health care and other low-to-moderate-paying fields.
Wages have barely kept up with inflation for several years running, and there
are no economic or political forces to push them up. Working people can make
more when employers bump up hours, which in October averaged a post-recession
high of 34.6 hours a week. Workers also will see their paychecks go further as gas
prices fall. But they are not getting ahead in any real sense.
None of this was inevitable. When the private sector is unable or unwilling to
create good jobs at good pay, government is supposed to use stimulus to spur
employment. It is also the job of government to enact and enforce polices like
robust minimum wages and legal protections for union organizing. But the 2009
stimulus, too small to begin with, was offset by federal spending cuts beginning in
2011, while job-enhancing policies have gone nowhere, in large part because of
Republican opposition.
Other forces that undermine broad prosperity bear examination. Trade with
nations that manipulate their currency, exploit workers and damage the
environment to gain unfair advantages costs Americans jobs. An outsized financial
sector feeds bubbles and busts that devastate employment. Republican leaders
have identified new trade deals and less financial regulation as priorities, but a
heedless push on those fronts ignores the negative job-related consequences.
The economy is not working for those who rely on paychecks to make a living,
which is to say, almost everyone. Steady gains in the October jobs report, while
welcome, do not change that basic fact. Nor will policies currently on the horizon.