By Jill Schlesinger
The U.S. economy added only 96,000 in jobs in August and the unemployment rateedged lower to 8.1 percent, from 8.3 percent. The report was disappointing for two reasons:
Job creation was lower than expected and the unemployment rate dropped only because eligible workers left the labor force.Coming on the heels of the two major parties’ conventions, the political stakes are high when it comes to jobs. Poll after poll show that voters are most concerned with the economy and the jobs markets and there are only two more monthly Labor Department reports due before the general election.
During the past two weeks, the parties have released dueling narratives of the jobs situation:
Republicans claim that progress is too slow and Democrats say that while the improvement may not be ideal, the damage was too vast to be repaired in a normal time frame. Who’s right?
There is no doubt that the country has seen gains in the jobs crisis: The economy has added 3.8 million jobs since employment bottomed in February 2010. (4.3 million private jobs created were offset by just over a half a million government jobs lost). But the hole is deep: There are still 4.8 million fewer total non-farm jobs since before the recession started.
It’s the same story with the unemployment rate: It’s down from over 10 percent only a couple years ago, but has remained above 8 percent for over three years, the longest stretch since monthly records began in 1948. Just before the beginning of the recession, the rate was 5 percent and at the current rate of job creation, it will take approximately 3 to 4 years to return to that level.
The problem continues to be the tepid pace of economic growth (1.85 percent in the first half of the year and 1.7 percent in 2011), which has been too slow to prompt companies to hire. Economists say that the economy needs to grow by closer to 2.5 to 3 percent to put more people back to work.
Beyond the raw numbers on job creation and unemployment rate, another insidious problem is infecting the U.S. labor market: Middle class wages are shrinking.
The Pew Research Center recently released a report called “The Lost Decade of the Middle Class.” Pew’s definition of middle class is households with annual earnings ranging from $39,000 to $118,000 in 2011 dollars. In 2011, this middle-income tier included 51 percent of all adults, a drop from 61 percent in 1971.
- The awful, awful August jobs report (aei-ideas.org)