The December jobs numbers are good news—sort of—for the economy and the Obama re-election campaign. The economy added 200,000 new jobs, and the duration of unemployment is down slightly. Wages and hours worked are up, too. We can anticipate continuing progress between now and November.
But the bad news is that though the trend is in the right direction, the progress is glacial. As Heidi Sherholz of the Economic Policy Institute (EPI) reports, the deficit of jobs needed to keep up with the normal growth of working age population is still upwards of ten million. Even at December’s modestly improved rate of net job-creation, it will take until 2019 for the US to recover its pre-recession rate of unemployment. Moreover, as EPI points out, if we factor in workers who have dropped out of the labor force by looking at the ratio of employment to population (which is still down almost five percentage points since the beginning of 2007), the adjusted unemployment rate would be 9.5 percent.
The other problem is wages. As the New York Times keeps reporting in its fine “Working for Less” series, some jobs are coming back but the wages are down by as much as half. And as long as that is the case, the measured unemployment rate can drop but people still feel as if their own personal economy is in a deep recession. Between June 2009—when the recession officially ended—and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909, according to a study by two former Census Bureau officials. This trend has only begun to reverse. Worker productivity is actually increasing at a rapid rate, but nearly all of these gains have been captured by corporate profits rather than worker wages.
As long as household income is down, there is not enough purchasing power to drive a recovery strong enough to generate enough good jobs at good wages. At the bottom of this problem are deep structural trends compounded by the financial collapse. They include a chronic trade deficit, the weakness of labor unions, and economic deregulation that gave corporations the power to batter down wages. Since the financial crash, these longer term trends have been compounded by the deflationary drag of the housing collapse and misplaced austerity fever. While the private sector is belatedly adding jobs, a public sector that should be leaning against the winds is still cutting net jobs.
So while the December jobs report is cautiously hopeful news both politically and economically, the administration, should President Obama win a second term, will have to do a great deal more to restore an economy of good jobs at good wages.