America’s Hollow Economic Recovery
April 17, 2014
|: A booming stock market masks the harsh economic reality for most Americans .
Seven years after the onset of the Great Recession, nearly all economists agree that we are in an economic recovery.
So why are things so bad?
A paper by Economic Policy Institute researcher Heidi Shierholz looks at why reports of full economic recovery mask the grim reality for most working Americans.
The stock market and corporate profits have both surpassed pre-recession levels, but few of those gains have trickled down to most households.
At the same time, the job market and wages continue to stagnate.
On job creation, Shierholzwrites:
The pace of the jobs recovery has not accelerated significantly since 2011. On average in 2011, the labor market added 175,000 jobs per month. In 2012, it was 183,000 jobs per month. Over the last 12 months for which these data are available (December 2012–November 2013), the labor market added 191,000 jobs per month … At 200,000 jobs per month, pre-recession labor market conditions would not be regained for another five years.
Much of the improvement in the unemployment rate is due to workers dropping out of the labor market altogether. In fact, if all those missing workers were still seeking work, the jobless rate would top 10 percent.
The weak job market also means a drag on wages. Real wages have dropped for 90 percent of workers since 2007.
It is not just job seekers who are hurt by the weak recovery—workers with jobs are also doing much more poorly than they would be if job opportunities were plentiful. This is because when the labor market is weak, employers do not have to pay substantial wage increases to get and keep the workers they need.
What can lawmakers and business leaders do to create an economy that works for everyone? Shierholz has a few suggestions:
Renew unemployment benefits:A weak labor market means it is nearlyimpossiblefor the long-term unemployed to find work. Cutting off unemployment benefits, like House Republicans did last December, removes the last lifeline for millions of out-of-work Americans.
Public investments:Large-scale public investments in infrastructure projects like bridges, airports, roads and school buildings could put millions to work and inject needed demand into the economy
Strengthen retirement security:Proposals to raise the Social Security retirement age will force older workers ready to retire to remain in the workforce – to the detriment of younger workers entering the jobs market.
Read the whole reporthere.
Photo used under a Creative Commons license from Flickr user NoHoDamon
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