On the surface, this week’s economic news was good. For the first time since 1999, U.S. businesses have added more than 200,000 jobs per month, for four straight months. May yielded 217,000 new hires, enough that America has (technically) recovered all jobs lost to the Great Recession.
However, workers — or would-be workers — may not feel enthused about this news. Beneath the ostensible economic progress lies troubling trends, and many citizens continue to feel the financial pinch.
For instance, unemployment has dropped to 6.3 percent — a five-year low — partly because scores of jobless citizens have simply stopped searching for work. The number of long-term unemployed, while down from 4.4 million a year ago, is still a staggering 3.37 million. That figure is triple the amount from when the recession began.
Moreover, much of the gains have been part-time positions. Some industries that have experienced a hiring upswing — hotels, restaurants, entertainment companies, retailers and temporary services — offer comparatively lower pay and fewer hours, without benefits like healthcare coverage. Since the recession began in 2009, 2.5 million more people have become part-time employees.
Working less than 40 hours per week, and having to purchase healthcare or risk going without it, surely does not feel like much of a recovery for anyone stuck in that situation. Many of these people had previously enjoyed the security of full-time work, plus benefits. Although America has recouped the number of positions lost since 2009, many now provide a lesser quality of living. When will that change?
Even for people fortunate enough to work full-time, there remains the lingering setback of stagnant wages. According to an AP news story, average pay has risen only 2 percent since 2009, well below the long-run average annual growth of about 3.5.
The cost of living may increase, but not necessarily the ability of employees to afford it.
Wage stagnation has especially affected staff in the middle or bottom rungs of the ladder. CEOs and other executives — particularity in financial industries — have continued to earn high salaries, and seem hesitant to share this good fortune among lower-level employees.
Which is bad for America, because consumer spending drives approximately 70 percent of our economy. With an increasing percentage of money staying in the hands of an affluent minority — as opposed to spread out among hundreds of millions of consumers in the middle- and lower classes — spending cannot recover to pre-recession levels. “The sluggishness in wages is the weak link that is preventing the U.S. economy from fully expanding its wings,” stated Gregory Daco, U.S. economist at Oxford Economics. Well said.
Beyond these dubious developments, there are solid signs of economic recovery. Auto sales have surged, and manufacturing and service companies are expanding. Additionally, America is on better financial footing than Europe, which was also devastated by the recession.
Unemployment in the Euro Zone is a stifling 11.6 percent. The key economic difference between America and Europe is the aggressive stimulus package approved by the U.S government in 2009, versus the overseas strategy of austerity. Cutting funding when already fiscally troubled has not proven an economic elixir. For its conservative approach, Europe appears to be years away from the promising stages of recovery that are currently underway in America.
It appears that Obama’s stimulus investment saved this country from a prolonged slump. Now if only business leaders would invest back into staff members by providing livable wages and full-time work. The resulting boost in consumer spending could be enough to push America into the final phase of economic recovery, in which the majority of citizens can share financial stability.