Don't Drink the Tea. Think With the WE.
Mar
2012
15

Reich: “The American pie is growing again, but most Americans aren’t getting much of a slice.”



In February, 227,000 new jobs were created marking the third straight month with gains above 200,000. Despite this sign of an improving economy, relief has yet to come to American workers whose share of the growth is at a record low. As Robert Reich recently pointed out, the nation is now producing more goods and services than it did before the slump began in 2007, but we’re doing it using six million fewer people.

Companies have increased their profits by decreasing payroll favoring software, technology, and Internet utilization. While companies can show gains, the American worker simply cannot:

The share going to everyone else in the form of wages and salaries is now the smallest since the government began keeping track in 1947.

A far smaller share of working-age Americans is now employed (58.6 percent) than was employed five years ago (63.3 percent). Today’s employment-to-population ratio isn’t much higher than it was at its lowest point last summer when it dropped to 58.2 percent.

The major driver of the U.S. economy hasn’t been consumer spending. It’s been businesses buying technology and rebuilding depleted inventories. But businesses won’t continue to spend and invest unless consumers start buying, big-time. Yet how can consumers do this when so few of the economic gains are going to them?

This is the central paradox at the heart of the American economy today. If it’s not resolved, the jobs recovery will stall

A year ago, we had another three-month run of good job numbers. Last February, March and April saw net gains of more than 200,000 jobs a month. But that job boomlet abruptly ended.

Most observers blamed the stall on external events — the Japanese earthquake, Europe’s gathering debt woes, and higher gas prices. In reality, it stalled because of the shallow pockets of American consumers. Another stall this time might be blamed on any number of external events — slower growth in China and India, the unraveling of Europe’s debt-crisis deal, and higher gas prices. But if another stall occurs, the real reason will be that Americans once again ran out of money.

People are beginning to think things are better than they were in 2008, but it is nearly impossible to say the current situation rivals 2007. Our expectations have simply lowered. The reality is that the people affected most by the economic downturn, those who had to face real budgetary decisions such as fixing a roof or making sure their children had enough lunch money, are going to have to wait a bit longer to see the relief they were promised. And if they do see it, it will likely be much less relief than was hoped for.

A majority of Americans are not to blame and are doing their part, according to Reich, one of the most outspoken critics of income inequality and skewed distribution of growth:

Regressive right-wingers want Americans to believe we’ve been living beyond our means and can no longer afford to do any of these things.

The truth is just the reverse. Most Americans’ means haven’t kept up with what the economy could provide if productivity gains were more widely shared.

Regressives growl about America’s borrowing and tut-tut about future federal budget deficits.

The reality is that the world is willing to lend us vast amounts of money because we’re so productive. And productivity gains are making us ever more so.

The American pie is growing again, but most Americans aren’t getting much of a slice.

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