From The Philadelphia Inquirer:
Five years after recession, American workers are scared, cautious, and worse off
By Jane M Von Bergen, Philadelphia Inquirer Staff Writer | Published Monday, September 1, 2014, 1:08 AM
Anthony Reynolds lost his job in 2009. The replacement job he found at Philadelphia International Airport pays half as much and does not include benefits. (Photo by Michael Bryant, Philadelphia Inquirer Staff Photographer)
When the phone call came, Anthony Reynolds, a big man with a ready laugh, cried like a baby.His ex-wife, living in Texas, had taken their son, 7, to a hospital for an important but minor procedure, and the hospital had turned them away. No insurance.
She called. He cried.
“When I lost my job, I didn’t have the heart to tell her that my benefits had been cut,” he said.
“I was so ashamed,” he said. “I’m 1,800 miles from my kids, and I can’t do anything for them.”
By the statistics economists gather, the recession officially ended five years ago, in June 2009. Reynolds lost his job in October 2009. He now cleans airplanes at Philadelphia International Airport, earning half what he once did, in a job with no benefits and no future.
“The recession is over?” Reynolds said. “I didn’t get the memo. I’ve been struggling.”
It’s a now-common journalistic practice to lead off articles on topics like the economy — once called the “dismal science” — with a human interest story, in this case to tell the reader that no, the economy really hasn’t recover yet, and here’s a guy who’s struggling. Only someone as rotten as your Editor would point out here that part of the reason that Mr Reynolds is struggling is because he and his wife divorced, and they are trying to support two households, not one.
But, after that human interest beginning, the story gets down to the meat of the dismal science statistics:
Five years after the recession, so much has changed in the world of work – celebrated, or at least noted, on Labor Day.
Hiring is up, with 209,000 jobs added in July, pulling the nation’s total payrolls ahead of where they were when the recession began in December 2007. The stock market has also risen, with the S&P 500 index breaking a record to close above 2,000, a key benchmark.
Even so, there is growing pessimism among the nation’s workers, with Americans in all walks of life worried about the future. Financially, they are worse off, as wages have stagnated and many jobs created since the recession are in occupations that pay less.
And this is the point at which the reader needs to refer to the Inquirer original to get the rest of the story; I’ve directly quoted more than is my wont. But note the rather odd way that the author put it: “Hiring is up, with 209,000 jobs added in July, pulling the nation’s total payrolls ahead of where they were when the recession began in December 2007.” Well, it’s true enough that the number of people employed is now higher than in December of 2007, 146,352,000 compared to 146,273,000, an increase of 79,000 more jobs. The trouble is that it is a 0.054% increase, when the working age, work eligible population increased by 14,867,000, or 6.38%. The official unemployment rate has come down from its recession highs, but that is because the labor force participation rate has dropped from 66.0% to 62.9%. That’s a 3.1 percentage point decrease, but, mathematically, a 4.7% decline. Finally, a statistic at which The First Street Journal looks at closely, the employment to population ratio has declined from 62.7% to 59.0%, a 3.7 percentage point decrease, but a 5.9% decline.
More simply put, 5.9% less of the work eligible population is actually working.
That has a huge impact on everything else. The Inquirer article noted that “wages have stagnated and many jobs created since the recession are in occupations that pay less,” and that all falls on the employment to population ratio: with so many more work eligible people not working, the supply of labor vis a vis the demand for labor has jumped significantly. Businesses don’t pay more for labor because they don’t have to pay more to actually get people to work.
The response of President Obama and his Administration? The same people who told us that the $816.3 billion American Recovery and Reinvestment Act of 2009 would hold unemployment to a maximum of 8.0% now want to address “income inequality” by raising the minimum wage, blithely unaware that increasing the costs of labor on the minimum wage employers means that such employers must either raise their prices or reduce the number of people who receive the increased rates, or some combination of both. The President and his economic team have been so wrong, so often, that the wiser bet, without having any other information at all, is to do the opposite of what they suggest.
Unfortunately, the President’s policies concerning wages are not the only ones which are bad for our economy. The Administration is trying to impose regulations which would impose huge new costs on businesses, costs which must be passed along to the consumers, concerning CO2 emissions, has constantly stymied (by the mechanism of simply delaying approval) the Keystone pipeline project (costing thousands of high-paying jobs), and, of course, the biggest cost of them all, the Patient Protection and Affordable Care Act, mandating that everyone have health care insurance and thus increasing burdens on businesses. All of these things stem from American liberal philosophy, from thinking how great things would be if everyone was just a good liberal, without having the first clue as to the economic costs of all of those things. We have said it before: if liberals actually understood economics, they wouldn’t be liberals anymore!
And now the Inquirer is telling us what we have known all along: it doesn’t matter that President Obama and his Administration have claimed to have made great progress, because this economy is just plain rotten. The gentleman pictured in the Inquirer article almost certainly voted for President Obama, if he voted at all, but the recession isn’t over for him yet, just as it isn’t over for a lot of people.
Your Editor is somewhat amused by the very existence of the Inquirer article. After all, the Inquirer endorsed President Obama in his re-election campaign, concluding, “BARACK OBAMA is the better candidate in the presidential race. A vote for him is an investment in a strong future, which is why The Inquirer endorses his reelection.”
“An investment in a strong future?” Boy, did they get that one wrong!