We have to stop looking at the country’s economic status through a single lens and start seeing it as the reflection of a light bending, multi-faceted prism. High GDP and low unemployment are both factors in economic evaluation. We have both today but neither is sufficient to paint an entire picture.
GDP reached 4.2% growth in the second quarter of this year. The third quarter growth rate fell to 3.5, which is still excellent. To date, fourth quarter growth is looking like about 2.8%, slower yet, but still acceptable. Average those quarters with the 2.2% first quarter and the yearly growth will be 3.2%, the first time a year’s growth topped 3% since before the Great Recession.
The unemployment rate has been on a steady decline since it hit 10% in early 2009. We are now at unemployment lows that, statistically, cannot get much lower due to a portion of the workforce that simply does not want to work. The current rate of 3.7% could get into the 3.0% range, but that isn’t good for businesses who want to hire. The African American rate is historically low, but still nearly double the average at 6.6%, and Hispanic rates hover just under 5%.
So, what is missing when we rely on these two statistics to explain a strong economy? The main issue is that today, the majority of workers are no better off than they were several years ago. Wages have not grown in tandem with the economy. Common goods like gas, health insurance, and even a trip to the grocery store all cost more today, making the working-class budgets even more fragile. The growth money is all going to the top of the list. It is going to people who often do not work to make their money, they simply let it pile up from dividends. Today, the 400 richest Americans are 10 times richer than those 400 in 1983. In 1965 the average CEO salary was 20 times greater than the average worker. Today, that average has risen to CEOs making 312 times more than their workers.
We cannot sustain a free and equal democracy with income divisions this high. Millions of people cannot continue to live week-to-week with no assurance of being able to sustain a family. The Founding Fathers saw income inequality as the most likely factor in bringing down the country. They were right.
Statistically, the jobs are there, but they aren’t the kind of jobs that are steady and pay a comfortable wage. Many professionals, including teachers and police, join laborers working more than one job just to pay monthly bills. Only one in five workers today has a contract and employer sponsored benefits. That means that if something happened to the job, missing one or two paychecks would economically ruin a family. That should not be the case for a majority of workers functioning in a solid economy. Instead, we witness a fragile economy that shows growth data that don’t translate to middle class success.
The recent tax cuts did not yield the working-class growth that was promised. But, we sorta knew that going in as trickle-down has never worked. The owner class used their windfall to buy back their own stock or just stashed it away off-shore or in some other tax shelter. There was no increase in demand, so companies had no need to grow. Some workers got a one-time bonus, enough to improve their month, but nothing to improve their lot over time. The president has been talking about another 6% tax cut strictly for the middle class, but that is never going to materialize–it never was an option. Ronald Reagan cut taxes and as soon as he did he noticed there was not enough money in the treasury, so he started raising them again.
How can we fix this? Well, I won’t disappoint those of you who expect my liberal thinking to report that the government must spend more and get money into the hands of the poor and working class who spend and raise demand. One big fix is massive infrastructure projects. It worked to get us out of the depression and brought about an economy that supported a soaring middle class in the 1950s. The interstate highway programs provided millions of well paid, long lasting jobs–there are still interstate highway jobs. The same can happen today. Much of what we are using as infrastructure needs repair and updating. There are tons of new technologies, transportation, and energy improvements that need to be built. All of these require skilled labor.
But, government provided infrastructure jobs are not the answer for the long run. The problem is that the jobs of the future are not the jobs of yesterday, or even today. 85% of jobs in 2030 do not exist today. Just like the industrial revolution got the U.S. out of an agrarian economy into factories, this technology revolution will bring workers out of the factories and into laboratories, or at least into high tech factories.
Education is the answer. It is tough to train for a job that doesn’t exist. But, it isn’t impossible to learn to study, make solid decisions, and expect and welcome change in our lives. Digging coal, three shifts of auto workers working around the clock, and even a robust steel industry are not viable options for tomorrow. Anyone using a single lens seeking information about the economy for life decisions isn’t taking broad enough action to secure the future of their family.
I agree. Education had always been the answer to raising the boats of our economy. A simple cure would be to increase teacher’s salaries enough to stop the Exodus of highly qualified teachers to more lucrative careers. I also believe in the promise of free tuition for public universities. I am old enough to remember the huge financial boon to our economy from the GI loans. Historical hindsight tells us we know how to fix this problem. We prepare for tomorrow’s jobs by investing in today’s education infrastructure.