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Numbers all add up to rich getting richer

by Mark Gisleson

Once again, Paul Krugman puts it all together:

Commerce Department figures reveal a startling disconnect between overall economic growth, which has been impressive since last spring, and the incomes of a great majority of Americans. In the third quarter of 2003, as everyone knows, real G.D.P. rose at an annual rate of 8.2 percent. But wage and salary income, adjusted for inflation, rose at an annual rate of only 0.8 percent. More recent data don't change the picture: in the six months that ended in November, income from wages rose only 0.65 percent after inflation.

Why aren't workers sharing in the so-called boom? Start with jobs.

Payroll employment began rising in August, but the pace of job growth remains modest, averaging less than 90,000 per month. That's well short of the 225,000 jobs added per month during the Clinton years; it's even below the roughly 150,000 jobs needed to keep up with a growing working-age population.

But if the number of jobs isn't rising much, aren't workers at least earning more? You may have thought so. After all, companies have been able to increase output without hiring more workers, thanks to the rapidly rising output per worker. (Yes, that's a tautology.) Historically, higher productivity has translated into rising wages. But not this time: thanks to a weak labor market, employers have felt no pressure to share productivity gains. Calculations by the Economic Policy Institute show real wages for most workers flat or falling even as the economy expands.

An aside: how weak is the labor market? The measured unemployment rate of 5.9 percent isn't that high by historical standards, but there's something funny about that number. An unusually large number of people have given up looking for work, so they are no longer counted as unemployed, and many of those who say they have jobs seem to be only marginally employed. Such measures as the length of time it takes laid-off workers to get new jobs continue to indicate the worst job market in 20 years.

[more]

How bad is unemployment really? The Los Angeles Times calculates the real unemployment rate is more like 9.7%.

The nation's official jobless rate is 5.9%, a relatively benign level by historical standards. But economists say that figure paints only a partial — and artificially rosy — picture of the labor market.

To begin with, there are the 8.7 million unemployed, defined as those without a job who are actively looking for work. But lurking behind that group are 4.9 million part-time workers such as Gluskin who say they would rather be working full time — the highest number in a decade.

There are also the 1.5 million people who want a job but didn't look for one in the last month. Nearly a third of this group say they stopped the search because they were too depressed about the prospect of finding anything. Officially termed "discouraged," their number has surged 20% in a year.

Add these three groups together and the jobless total for the U.S. hits 9.7%, up from 9.4% a year ago.

Over at The American Prospect, Harold Meyerson reflects on the meaning of it all in "Un-American Recovery: How the Bush recovery has undone the great balancing act of the New Deal."

After inching along imperceptibly for quarter after quarter, the economy is, by some measures, roaring back. The annual growth rate last quarter topped 8 percent, while productivity increased by more than 9 percent. To be sure, employment is still down by 2.4 million jobs since Bush took office, but it's finally begun to rise a bit....

Who could ask for anything more?

Well, the American people, for one. Since July the average hourly wage increase for the 85 million Americans who work in non-supervisory jobs in offices and factories is a flat 3 cents. Wages are up just 2.1 percent since November 2002 -- the slowest wage growth we've experienced in 40 years. Economists at the Economic Policy Institute have been comparing recoveries of late, looking into the growth in corporate-sector income in each of the nine recoveries the United States has gone through since the end of World War II. In the preceding eight, the share of the corporate income growth going to profits averaged 26 percent, and never exceeded 32 percent. In the current recovery, however, profits come to 46 percent of the corporations' additional income.

Conversely, labor compensation averaged 61 percent of the total income growth in the preceding recoveries, and was never lower than 55 percent. In the Bush recovery, it's just 29 percent of the new income coming in to the corporations.

Meanwhile, here in Minnesota, our guv wants to start building toll roads, but that's OK because we can use weak dollars to pay our way.

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VoteHere has been hacked. No big deal, just another warning that e-voting isn't ready yet. Personally, I'm kind of sad that Minnesota uses the highly accurate "optical scanning" technology. I can't think of a better way to start election day than walking into my precinct polling place and tipping over some electronic voting machines that don't produce a paper trail. Don't think this crowd will leave the building without trying to cheat their way into a second term. We will have to fight to take back the power, and that requirement alone should prohibit any current member of Congress (Kucinich excepted) from getting the nomination.

Via Steve Gilliard, Fair Elections is the anti-Diebold site, and has the Martin Sheen seal of approval.

Linked to some folks who were joyfully trashing David Brooks yesterday, but now Tom Stoller does an even better job of eviscerating our #1 Bobo.

And Jay Rosen rethinks Paul Krugman's recent media advisory.

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As a New Year's treat, it's hard to beat Hillary Clinton as the most admired woman. We won't talk about who won the men's division, but 8% isn't much to crow about after "winning" a war.

Regular Salon readers may have wondered where This Modern World was yesterday. I don't know, but this link will take you to "Dean Can't Win," the latest irony-filled Tom Tomorrow strip.

Heading: He can't win because George McGovern didn't win!

1st pundit: "That's right! Thirty years ago, in a completely different cultural and political context, another guy lost!

2nd pundit: "Well, that's proof enough for me!"

* *

Stirling Newberry on Dean vs. Clark:

One Republican insider put it bluntly: "Common knowledge that it is the Dean people, who have Gore's blessing, versus the Clinton people for control of the Democrat (sic) Party." While not subscribing to the Hillary Clinton conspiracy theories, it is clear that the Clinton donors list has picked its candidate, and that candidate is Wesley Clark. The spigot is off for the the other candidates....

The money primary speaks volumes: there is Dean, Clark, and everyone else. With the cries of poverty that regularly come from Little Rock, and their complete lack of an internet strategy other than to send fundraising letters and occassionaly ask for some basic pelting of political figures and reporters - the campaign's strategy is, as several people connected with the campaign have maintained all along - to unleash a massive ad blitz, starting with New Hampshire, against a high burn rate Dean campaign. The Clark campaign is, basically, hoping that the power of media and money can win the nomination one last time. The money primary is a dead heat between the two: Clark will probably qualify for 3 to 4 million in matching. Dean would have qualified for at least 5 million, but decided to opt out of the system in a bid to be able to spend freely to hold Iowa and New Hampshire.

What keeps this strategy afloat is not that it might work, but that for many Democratic Party insiders, it must work.

Posted by Steve Perry at December 30, 2003 10:27 AM

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