Days after print publication, Bill Knight’s syndicated newspaper column, which moves twice a week, will appear here. The most recent will appear at the top. (Columns before Sep. 11, 2017, are archived at http://billknightcolumn.blogspot.com/).

Wednesday, March 6, 2019

Good economic news tells only part of the story


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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