Bill Knight column for 2-28, 3-1 or 2,
2019
The U.S. Labor
Department in February reported that the national economy added 304,000 jobs in
January, a number that – with December’s 311,000 jobs – surpassed expectations.
It seemed to be a healthy report in a 10-year period of growth, behind just
2014 and 2015 (during the Obama administration).
Also, the Bureau of
Labor Statistics (BLS) reported January’s 2.3 percentage-point gain in factory
growth following December’s wage growth of 1.2 percent in “real average weekly
earnings” from 12 months before, and the unemployment rate BLS reported Feb. 1
was 4.0 percent.
Good news, it seemed.
However …
That modest
improvement in pay still trailed the 4.2-percent increase before 2001’s Great Recession.
So it’s no wonder
most workers don’t feel pleased – and actually feel trapped.
After all, the Consumer
Price Index outpaced the slightly better earnings; inflation was 1.3 percent
over the same December-to-December time.
Former Treasury
Department economist Ernie Tedeschi commented that slow wage growth “is, to put
it mildly, a mystery. If workers are as scarce as the unemployment rate and
many other measures suggest, employers should be raising wages to compete for
them.”
CBS News’ business
analyst Jill Schlesinger suggested other theories:
* Productivity (apart
from factories) has stalled;
* federal data don’t
reflect the thousands of workers who gave up seeking jobs because they retired,
became disabled, underwent training or went back to school, or are just
resentful at their options; and
* labor-union
membership has declined, and therefore so has workers’ bargaining power.
“Wages are up [but]
the gains have been far from equal,” commented Brad Hershbein of the Brookings
Institution.
Indeed, Schlesinger
added, “There have been gains for top earners and new minimum wage rules (5.3
million more workers will be receiving higher pay in 2019 as minimum wage
increases kick in, according to an analysis of Census Bureau data from the
liberal think tank Economic Policy Institute) have boosted pay for those at the
lower end. But growth in the middle has paled in comparison.”
Further, there’s a
huge disparity between urban and rural economies, and even between booming
cities and urban areas that are struggling.
The Brookings
Institution says, “Big hubs of technology jobs in places like San Francisco,
Boston and New York with populations over 1 million have flourished –
accounting for 72 percent of the nation’s employment growth since the financial
crisis. By contrast, many of the nation’s smaller cities, small towns and rural
areas have languished. Smaller metropolitan areas (those with populations
between 50,000 and 250,000) have contributed less than 6 percent of the
nation’s employment growth since 2010 while employment remains below
pre-recession levels in many micro towns and rural communities (those with populations
of less than 50,000).”
Add to that the
skyrocketing costs of housing. Years ago, unemployed Americans or ambitious
job-seekers would relocate to places where opportunities seemed available. But
people unable to sell their houses or afford prices in economically healthier
markets have far less flexibility.
“A lot of workers,
especially younger ones, are still smarting from the Great Recession and are
not eager to ask for a raise or willing to take a risk of a new job with
another company,” Schlesinger wrote.
Therefore, BLS’ real
average weekly earnings for “production and nonsupervisory employees on private
nonfarm payrolls” rising from $311.50 in December 2017 to $315.29 in December
2018 can’t make much difference. The $3.70 increase can’t buy one movie ticket
to escape the feelings of exclusion and entrapment.
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