Job report masks signs of trouble

While the Associated Press reports on “a job market steadily gaining steam ahead of November’s presidential election,” President Bush still has plenty to worry about from working-class voters concerned with the economy.

After nearly three years of steady job loss, there have now been three months of growth totaling 947,000 jobs, according to the latest report from the Bureau of Labor Statistics (BLS). How good is this?

It’s about equal to the average rate of growth in the postwar era. Over the last 60 years, in half the months the economy added jobs at a higher rate than the last three months. But 30 months after the recession officially ended, we should be doing far better than average, in order to make up for millions of jobs lost. Even if the present pace continues, on Election Day there will be 2 million jobs fewer than Bush’s Council of Economic Advisors predicted would be created by the tax cuts for the wealthy, passed in June 2003.

Nonetheless, job growth at this pace will, eventually, result in a gradual drop in the unemployment rate. Will the economy continue to add jobs at this rate? Jared Bernstein at the Economic Policy Institute (EPI) – hardly a Bush supporter – said at a June 6 press conference that the economic recovery is self-sustaining at this point, and that job growth will continue, unless some external shock upsets the apple cart.

Unfortunately, there are a number of shocks just waiting for their moment. Dean Baker of the Center for Economic and Policy Research warns that houses are being built “at a pace that exceeds demand by 400,000 units a year” and that “a decline in home prices and residential construction could lead to a sharp downturn in the economy.” He also warns that prices are increasing faster than wages, which “cannot support very rapid consumption growth unless consumers go even further into debt.”

Some big-business economists are also concerned. According to The New York Times, Paul Kasriel of the Northern Trust in Chicago predicts economic growth will slow later this year, and bigger difficulties are in store in 2005. “That’s when I think we could see the dollar go into a sharp decline, inflation spike up. … That’s when we ultimately pay the price for our excesses,” he is quoted as saying.

But George Bush is not worried about 2005. The last employment report before the election will be only four months from now. Alan Greenspan, who has practically turned the Federal Reserve into a branch of the Bush campaign committee, will likely wait until after the election to do anything that rocks the economic boat. And no matter how many or how few jobs are created in the next four months, the Bush campaign will likely claim they are all due to his policy of tax cuts for the rich.

But, at the EPI press conference, Jared Bernstein said that more jobs may be available, but the benefits are not being broadly shared. And no wonder: low-paying jobs are growing fastest, while the share of good jobs is shrinking, he said. The organization OMB Watch reports that corporate profits are at record highs, while labor compensation is at a 38-year low. As Molly Ivins put it in a recent column, “We work harder, they get the money.”

Working people know that the economy is not working for them. Bernstein pointed to a gap between the growing job figures and low consumer confidence, and cited opinion polls showing that working people are not feeling a recovery in their pocketbooks. People know that when their kids find jobs, they are lousy, and they know they don’t have any more money to spend after paying for gas and college tuition, he said.

As we have said in this column, recessions are built into the capitalist system, regardless of who is president. But Bush has used the recession to intensify a class war against working people, and his policies have contributed to the slowness of the recovery.

The same day the administration was crowing over the BLS employment figures, thousands of activists gathered at the “Take Back America” conference in Washington, while the “Inequality Matters” conference convened in New York. Given the level of working-class anger and mobilization, Bush should be very worried.

The author can be reached at economics@cpusa.org.