Stiglitz on employment during recoveries
The Bureau of Labor Statistics will release employment figures for May 2004 tomorrow. If we get good news, expect the White House and many in the press to tout how strong the economy is.
The following passage from page 121 of Joseph Stiglitz’s Globalization and its Discontents may be on point:
On Wall Street, a crisis is over as soon as financial variables begin to turn around… However, to truly measure recovery, stabilization of exhange rates or interest rates is not enough. People do not live off exchange rates or interest rates. Workers care about jobs and wages. Although unemployment may have bottomed out, that is not enough for the worker who remains unemployment or who has seen his income fall by a quarter. There is no true recovery until workers return to their jobs and wages are returned to pre-crisis levels…The very fact that the IMF focuses on financial variables, not on measures of real wages, unemployment, GDP, or broader measures of welfare, is itself telling.
While Stiglitz was referring to the East Asia Crisis, this passage could apply to the current U.S. economy if we replace “IMF” with “RNC” (or even NRO) and substitute profits in place of exchange rates and interest rates. And yet the popular press keeps saying the 2004 economy is very strong. That average annual real GDP growth has been a mere 2% is hardly strong.
And let’s consider that 1.1 million increase in employment since August 2003 in context of two things: (a) the 2.7 million decline from March 2001 to August 2003; and (b) normal growth in labor supply, which may be near 4 million over the 3-year period. 1.6 million jobs lost when we should have seen almost 4 million jobs created is not a record the RNC should be proud of.
Ah but I using the Establish Survey numbers rather than the Household Survey numbers. OK, consider the fact that the civilian employment/population ratio has fallen from 64.4% when Bush took office to its current 62.2%. Multiplying the 2.2% difference times the reported 222.757 million figure for adult population and one sees that even this survey suggest we are almost 5 million jobs short of where we should be.
Has the RNC adopted some “economic malaise” or “soft bigotry of low expectations” philosophy? Let’s hope employment growth exceeds expectations but unless it greatly exceeds expectations, we will still be far from full employment.