It would be tempting on this Labor Day to glance at headlines about the economy and declare that things are looking up for American workers.
The official unemployment rate is down to 6.2 percent, the lowest since the onset of the Great Recession. As the nation’s secretary of labor notes in the letter below, American businesses created almost 10 million jobs since the recession was at its lowest point. Downtown Miami’s skyline sparkles with new construction and some depressed neighborhoods are undergoing a revival.
But if working Americans are better off these days, why do most of them believe the economy is pretty miserable? In mid-August, according to Gallup, 56 percent said the economy was getting worse. Three percent said the economy was excellent, and 8 percent said it was good — but 35 percent said it was poor.
Most people in the job market and in the workplace — the labor force we cheerfully celebrate today — aren’t buying all the happy talk about a strong recovery. The reasons are plentiful.
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For one thing, many people are so discouraged they’ve stopped looking for jobs. The share of the working-age population either employed or seeking a job fell to 62.8 percent, the lowest “participation rate” since 1978. It’s a telling glimpse of the true unemployment picture. A shrinking workforce weakens every other aspect of the economy and ensures that the recovery remains sluggish.
For another, the U.S. workforce has never been older. The share of workers 55 and over hit 22 percent this summer, the highest level since the government started measuring in 1948. That reflects the inability of many older workers to retire because of losses suffered during the recession and the disappearance or shrinking of retirement pensions. Many older employees would like to retire, but can’t and don’t have much to cheer about. An older workforce also makes it harder for younger people to advance.
Finally, there’s the inequality factor. A telling report in mid-August by a private research group found that the income of middle-class families is lower now, adjusted for inflation, than when the recovery began.
Middle-income families, the wellspring of the labor force, are worse off now in terms of income and purchasing power than when the recession started, and they know it. National income (GDP) is up, but working Americans as a whole have not shared in the expansion.
Some of this, we hope, will vanish if the recovery continues to expand. At some point, the demand for workers will require greater competition for their skills and thus bigger inducements and incentives from employers. That’s the theory, anyway.
But even more helpful would be a government strategy to help the middle class regain confidence and strength. That would include a higher minimum wage. The current national minimum wage, frozen at $7.25 per hour since 2009, hasn’t kept up with inflation and hardly suffices to help a single person, much less a head of household, live with any sense of stability.
Other programs like investment infrastructure, universal pre-school for 4-year-olds, amending the tax code to help Americans save for retirement — all of these would help middle-class Americans regain a sense of prosperity.
That kind of agenda, of course, requires a willing Congress and an effective president. Given the record so far, that’s not likely to take place anytime soon. But it’s Labor Day. We can dream.